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Real Time Protections From Social Media Fraud

I recently contributed a post on how social media can be both a blessing and a curse for banks, financial institutions and their customers. In this post, I’d like to share some ways financial institutions can protect themselves and their customers from the potential of fraud.

Social media and networking sites are designed to share and express individuality on a massive scale. While this is helping bankers ‘know their customer,’ it also is helping fraudsters ‘know their victim’ by having access to individual data on a massive scale.

The amount of personal data (full names, employers, education, age and date of birth) shared publicly on social media and networking sites such as Facebook, MySpace and LinkedIn present a form of ‘one stop shopping’ opportunity for fraudsters and helps them commit the ‘old fashioned’ type of fraud as if they had dug through someone’s trash for their personal information. This modern day dumpster diving may be less smelly, but it is equally as damaging.

Although social media and networking fraud relies on the innocent sharing of seemingly unimportant data by customers, the gullibility of customers and their subsequent compromising of transaction authentications, the power of prevention and mitigation of risk lies with the financial institutions. A strategic path many financial institutions are investigating is the enhancement of user authentication technology with advanced, 360-degree, event monitoring.

While real-time protection is important for credit card transactions, it is beyond critical for debit and ATM card transactions where consumers’ bank accounts are debited immediately. With real-time protection, systems identify payments events that demonstrate high probability of fraud, thus avoiding any loss to the bank or consumer.

Real-time protection is only one piece of the puzzle. The other piece is to approach fraud detection and protection as a customer relations strategy; one which improves account holder security throughout the banking operation. The benefits of building an enterprise platform on top of what may begin as a debit card fraud program are many.

For example, when a bank’s systems look across broader bank-customer it may uncover suspicious activity that would have appeared normal if viewed independently. There are many cross-channel fraud scenarios that fraudsters use to target banks. Such connections can be easily missed when each function has its own specific approach and methodology to fraud. But to get to the level where a bank can effectively detect suspicious cross-channel activity requires an underlying platform that has the flexibility to understand card, internet banking, wire, ACH and other data sets, both financial and non-financial.

The speed and cunning of social media based fraud demands a real-time, 360-degree response. By deploying a broader consumer protection strategy, banks not only mitigate the risk of fraud, they are able to deploy a strategy that aligns with the new cultural and technical paradigm of social-media.

By David Nussenbaum, VP product line manager at ACI Worldwide. He began his career working in the cash management group of today’s JPMC. He has specialized in fraud management at HNC-FICO, TransUnion and FML.