January 10, 2011
Credit card fraud costs US merchants and credit card companies more than $3.4 billion a year. That figure would undoubtedly be much higher without the use of computer surveillance systems to monitor every transaction.One of the most proven anti-fraud systems is FICO’s Falcon Fraud Manager, which keeps tabs on more than 4 billion transactions a month and uses lightning-fast neural networks to scan for suspicious purchase patterns. The Falcon system specializes in detecting things a human would never notice. For example, if you use your card to buy a tank of gas and then go directly to a jewelry store to make a purchase, your account will almost surely be flagged, especially if you’re not a person who buys a lot of bling. The reason: Over years of correlating variables, testing, and learning, the system has noticed that a criminal’s first stop after stealing a credit card is often a gas station. If that goes through, the thief knows the card hasn’t yet been reported as stolen.
(Full Story: Fraud Detection – the neural nets are watching. – Wired)
