Once again we have been reminded of the vulnerability of financial institutions to credit card fraud. Last week we saw the news that a large gang of thieves (a number of whom have just been arrested in New York) managed to steal an enormous $45 million from thousands of ATMs in just a matter of hours.
This latest crime may have been complex in its deployment – the sheer scale of it was staggering – but at its heart was the “traditional” technique that I have spoken of before: obtaining customers’ credit card details and later using the data to manufacture false credit cards.
Questions must be asked of a system that allowed $40 million to be withdrawn from 36,000 cross-border transactions in just 10 hours. Sadly, it may not be an isolated case. This crime highlights the fact that cross-border fraud, committed at ATMs and Point-of-Sale (POS) devices, remains a major problem for card-issuers the world over.
Many current bank systems are either missing fraudulent transactions (as we’ve seen here) or, conversely, are dogged by false positives (declining legitimate transactions) in order to stop fraudulent transactions, which can result in inconvenienced customers and higher costs. But there is technology already being used that mitigates both issues, essentially by ‘tying’ individuals’ credit cards to their mobile phone and using proximity correlation analysis.
If the accounts affected by this crime had this technology incorporated, the thieves would not have been able to withdraw money from their various ATMs because the system would have picked up that the account holder’s mobile phone wasn’t in the same proximity as the fake card.
This latest crime underlines once more the need for efficient, real-time detection, prevention and resolution, protecting the customer and the banking organization from both fraudulent transactions and false positives.
About Pat Carroll
Pat is a founding Director and CEO of ValidSoft. He has over 20 years of experience in Information Technology and Financial Markets.
Prior to founding ValidSoft, Pat was employed as Head of Electronic Trading Technology in Europe for Goldman Sachs International where responsibilities included technical strategy related to Electronic Trading, Client Connectivity and Straight Through Processing (STP). In addition, Pat co-headed European Equities Technology and was a technical advisor to the Investment Banking Division (PIA).
Pat has extensive Financial Services & technical experience (over 25 years) and has previously worked in a senior capacity with J.P Morgan, Credit Suisse Financial Products and Bankers Trust Company.