JACK HENRY & ASSOCIATES, INC.® (JHA) CASE STUDY
First Credit Union Prevents Fraud with Card Processing
Solutions™ (CPS) Enhanced Authorization Restrictions
“I can act right away and stop losses as soon as the
restriction is created.”
Mary Graves
Payment Services Manager
First Credit Union
In December of 2013, Card Processing Solutions (CPS) bolstered its
fraud prevention tools by enabling enhanced authorization restrictions.
The changes allow credit unions to make highly targeted, multifaceted
transaction restrictions immediately, including the ability to exclude
individuals from these restrictions. In other words, credit unions now have
more power to respond quickly and intelligently to fraud trends.
First Credit Union of Phoenix, Arizona was one of the first to make use of
these new tools. Payment Services Manager, Mary Graves, provides some
details of the institution’s success.
Jack Henry & Associates: You were quick to take advantage of the new
restriction ability. Why?
Mary: I absolutely love it. If we start to see problems from skimming, I
can go and create a restriction and stop the “bleeding” right away. In the
beginning, the rules were a little overwhelming, but the more I use them,
the more comfortable I am.
JHA: The new restrictions became available around the same time that
the Target breach was revealed. Tell us about your success with that.
Institution
First Credit Union
Location
Phoenix, Arizona
Website
Firstcu.net
Assets
$417 Million
Founded
1935
Card Processing Solutions™ (CPS)
Fraud Center
Extra Awards®
JHA PAYMENT SOLUTIONS CASE STUDY
First Credit Union Prevents Fraud with Card Processing
Solutions™ (CPS) Enhanced Authorization Restrictions
Mary: Prior to the public Target announcement, I created a restriction rule for a Target store in Chicago due to some fraud alerts
we were receiving. The fraudsters attempted to use seven different card numbers over a two-day period, all for very similar
amounts. The fraud exposure was $2,599 during those two days. However, our loss was only $326 because that was the amount
of the charge posted prior to creating the restriction. We were able to save $2,273 because we reacted so quickly.
JHA: Can you describe some other ways you’ve used the enhanced restrictions?
Mary: On another occasion, I began to notice a trend of card-present transactions in South Carolina. I created a rule for
that state that blocked transactions greater than $99 for certain merchant codes. After setting this restriction, the fraudsters
attempted to use four different cards for a potential loss of $1,452. Due to the rule, the transactions were declined.
To give a recent example, this week I noticed some card-present transactions from a gas station in Colorado. We have many
members who live or travel there, so it’s harder to create a restriction that will not have a negative impact on members trying to
make valid transactions. I created a restriction for that specific merchant for card-present transactions and only allowed PINbased charges. Although we had lost $653 over the course of a couple days, we were able to stop an additional $500 loss due
to the restriction.
Also this month I began to receive fraud alerts from Canada and identified a trend. I quickly set a restriction to decline cardpresent transactions in Canada and saved $1,856 in losses over a 10-hour period. No additional attempts were made since
that day. Once the fraudsters see that the charges are declined, they move on. By setting the restrictions so quickly, we had no
reported fraud loss from this trend. One member was affected, but when we explained the trend we were seeing, the member
thanked us for protecting the account.
JHA: Have there been problems due to legitimate transactions being declined?
Mary: No, there are not many negative impacts. Sometimes a mistaken decline may happen if a member is traveling and
hasn’t told us ahead of time. If we know in advance we can exempt them. It also eases member frustration when we take the
time to educate them about fraud and our protections. We tell them about the fraud we are seeing and explain that we’re
being proactive to protect them, and let them know that they can use PIN transactions. We also educate members about
phishing scams. We’ve recently seen some text message phishing. Fortunately members usually call us and ask when they
receive a text message asking for a PIN or other sensitive information. We can direct them to our website where we have
information about phishing.
JHA: Do you have some general guidelines regarding how you use the new restrictions?
Mary: I watch for alerts, look for a trend, and build a restriction around that trend. I recommend taking the advice from the CPS
risk management group, which is to set the restriction for signature transactions only and allow PIN transactions. When setting
a dollar limit amount, we set it a bit higher than the average transaction for the particular merchant in that area. That way if we
do take a hit, it’s a relatively small one. You have to decide what amount you’re comfortable with, knowing that some legitimate
transactions might be declined.
JHA: How would you sum up your experience with enhanced authorization restrictions?
Mary: The tool is definitely an added benefit. I can act right away and stop losses as soon as the restriction is created. We’ve
certainly seen a reduction in fraud because of it. CPS has been very helpful in guiding us with some of the trends.
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