fraud machine learning - fis machine... · pdf file the big business of fraud fraud as a...

Click here to load reader

Post on 23-May-2020




0 download

Embed Size (px)


  • May 2017 Scott Bright, VP Fraud Product Strategy

    Fraud Machine Learning A digital arms race that holds security in the balance

  • Session Agenda


    • What is Artificial Intelligence Machine Learning?

    • Technology used by criminals

    • Why does the payment industry care?

    • Strategy and tools in the market to combat fraud

  • 3

    What is Artificial Intelligence

    Machine Learning?

  • Machine Learning Evolution of Machine Learning Approaches

    • Statistical algorithms use mathematical probability to predict outcomes

    • Classical statistics-based solutions can’t improve performance over time

    • Cognitive processes model human thinking to solve problems – Heuristic rules

    – Inductive logic

    Cognitive models can improve if new rules are added manually

    • Machine learning is a class of computer algorithms that improve their performance by learning from positive examples.

    – The algorithm is trained with specific examples with known solutions

    – The algorithm then predicts answers from unknown datasets

  • Machine Learning Algorithms:

    Classification Techniques

    Clustering is the task of grouping a set of objects in such a

    way that objects in the same group (called a cluster) are more

    similar to each other

  • AI Neural Networks Approach:


    Neural Networks are a family of models inspired by biological neural networks (the central nervous

    systems of animals, in particular the brain) and are used to estimate or approximate functions that can

    depend on a large number of inputs and are generally unknown.


    • Highly abstract data


    • Adaptive, rapidly



    • No need for


  • 7

    Technology used by


  • Available 24/7/365 to anyone

    The Big Business of Fraud Fraud as a Service

    Who is involved:

    • Organized crime syndicates

    • Foreign governments

    • U.S. Domestic crime rings

    • Individuals accessing the Dark Web

  • How the Dark Side Runs Their Business

    • Criminal enterprises with corporate structures:

    – Profit/loss margins

    – Criminal business strategies

    – Targeted objectives

    – Leveraged with other enterprises

    • Criminal factions don’t want just the card:

    – Database-driven

    – Cardholder demographics

    – Exploit data for maximum penetration

    – Use malware to steal data where appropriate

    • Use and take advantage of consumer spending patterns:

    – Fraud trends mirror everyday spend categories.

    – “Shock and awe” fraud is occasional rather than the norm.

    – Use high-profile goods to convert to a cash equivalency (i.e., gas, gift cards,

    cigarettes, etc.)

  • 10

    Why does the payment

    industry care?

  • Data breaches on the rise


    • Data Breaches increased by 40% in 2016

    • All time record high with 15.4 million victims affected

    • Business sector topped the list with 45.2% overall

    • Healthcare 2nd with 377 reported breaches or 34.5%


    Industry Sectors Percentage of Overall Breaches

  • Cybercriminals have better toys


    • Shimmer devices used on ATM and card readers

    • Fraudulent online purchases made in groups of small purchases to go undetected

    • New technology created for fraudsters that span across all business markets that never

    used fraud mitigation tools


    Source: White Ops

  • Fraud losses hit right in the bottom…line


    • By 2020, card fraud worldwide is

    expected to total $31.67 Billion

    • Fraud losses are expected to grow

    annually 12% in 2017 & 2018

    • Account takeover losses in 2016

    reached $2.3B a 61% increase from

    last year

    Data sources from: Neustar, The Nilson Report, ThreatMetrix

  • 14

    Centralize Fraud


  • 15

    New Account Fraud Account Takeover Payments Fraud

    Authentication Data AnalysisPost Transaction Consumer




    ID Verification



    Device Authentication

    Consumer Controls Transaction Monitoring

    Machine Learning

    Business Intelligence

    Predictive Analytics Transaction WarrantyCompromised Cards

    Dedicated Analyst

    Custom Rules

    Global Rules

    2-way Messaging

    Fraud Mitigation

    Associations Travel


    Attack Types

    Solutions in the Market

    CAMS Alerts

    Mitigation Categories

    Malware Detection

    Internal Fraud

    Employee Fraud


    Automated Chargeback

    Dynamic Jailbreak Root Detection

    ANI Spoofing

    Fraud Solutions Landscape As the complexity of payments increases so does the demand for new fraud solutions

  • Enterprise Strategy for Omni-Channel Protection


    Leverage each channel’s unique processing to create a holistic view to fraud mitigation

    • Fraud strategy across multiple product lines

    including credit, debit,

    prepaid, & merchant

    • Create a forum to allow various fraud analyst

    groups to talk and share

    • Identify gaps in business lines to start the solution


    • Combine various fraud roadmaps to drive into a

    single through line

  • Fraud in Payments Breakout Sessions Additional sessions to attend related to payments fraud mitigation

    Application Fraud: The reemergence of an old tactic with a

    new approach

    Wednesday 2:00 – 3:00pm & 3:30-4:30pm

    Room: Tampa 2

    The Looming Account Takeover Threat

    Tuesday 1:45 – 2:45pm

    Room: Sun 4

    Fraud Analytics and how to Harness the data

    Tuesday 3:15 – 4:15pm

    Room: Tampa 2

    Consumer engagement: A Cardholder’s New Role to Stop

    Fraud and Save You Money

    Thursday 9:45 – 10:45am

    Room: Tampa 2

    Fraud Machine Learning: A Digital Arms Race that Holds

    security in the balance

    Tuesday 3:15 – 4:15pm

    Room: Sun 6

    Kiosk 308A Stop by to learn more in

    the Expo Hall

  • 18

    One last thought…

    “If you don't like change, you're going to like

    irrelevance even less.”

    -- General Eric Shinseki, Chief of Staff, U.S. Army

    The fraud movement continues to morph into an industry with untraditional competitors

    changing the traditional business models and technology

    Together, with FIS we can lead the payments market so regardless of size – can

    effectively compete against fraud

    Create a strategy through leadership of defining and leading sustainable change within

    how fraud is mitigated

    This focus on fraud is critical for our success and the industry

    We will not have a second chance, the time is now

  • Thank you Scott Bright

    [email protected]

    mailto:[email protected]

  • ©2017 FIS and/or its subsidiaries. All Rights Reserved. FIS confidential and proprietary information.