FICO and ValidSoft Provide Proximity Based Fraud Detection

FICO, best known for providing analytics and credit card scores here in the US, has partnered with ValidSoft to provide new security measures in the mobile and card payment space.

The new security measure, called the Proximity Location Service, analyzes the cardholder’s mobile phone location with the POS system or ATM that is being accessed by the cardholder. Debit and credit card issuers can integrate this service to provide more accurate fraud detection.

Based on the proximity between the two, potential transactions can be flagged as fraudulent, but more importantly, it will provide more accuracy and less false positives for transactions that would normally be deemed suspicious.

According to FICO, trials involving UK cardholders have shown that the Proximity Location Service decreased the number of false positives by as much as 70%.

Gabriel Hopkins, senior director, Product Management at FICO says that, “Banks are trying to perfect a tricky balancing act — protect customers without causing undue frustration for cardholders who travel or who use their cards in new locations. Proximity correlation adds a powerful new tool that can help banks eliminate a great source of frustration for their customers who travel. With this service, cardholders can use their cards in other countries with significantly lower risk of being declined.”

Several UK banks are planning to integrate this service, and should provide an ease of frustration for travelers, who often find themselves being flagged for fraud when purchasing goods and services while abroad.

The technology here could potentially create a customer-focused, and friendlier security measure, since consumers are growing more attached to their mobile phones. They can be an accurate marker used to determine fraud in most cases.