Delta Community Credit Union serves a member group that, at any given moment, can be anywhere in the world–70,000 Delta Air Lines employees. Using basic risk-management practices, Delta Community managed to combat fraud and stabilized losses at acceptable levels even with such diverse card usage.
What was holding the credit union back from reaching the next level in fraud prevention was the fear of cardholder disruption. Faced with the complexity of a member base that literally uses their cards in multiple cities and countries on a single day, there was a real concern for transaction denials. Julie Fair, Delta Community's Risk Analyst, stated, "Since we have a lot of airline pilots and flight attendants traveling, there's great sensitivity around doing any kind of real-time decision making that may risk denying legitimate transactions."
So Delta Community needed a risk-management solution that would further reduce fraud losses while keeping false positives to a minimum. And in case of any transaction rejection, there needed to be a way for the member to get immediate approval, within any time zone in the world.
Delta Community enjoyed a long-standing relationship and open communications with Visa DPS and was excited to hear about a Visa DPS service called Managed Real Time (MRT). MRT sounded like the perfect tool to augment the credit union's current risk management approach.
As Julie recalls, "We were very excited to hear about this service from Visa DPS. And because of our positive history with them, we had full faith MRT would give us a new level of fraud protection with minimal member disruption."
Rick Fisher, Risk Services Product Manager at Visa DPS, got to work with Julie and her team. "We spent a great deal of time diving into the intricacies of Delta Community's situation, digging through the challenges of the fraud problem. You have to do a lot of detective work before you can decide on the exact management approach."
The key to reach new levels of card fraud reduction was the ability to manage fraud "live," and a threelayered approach provided by Visa DPS was just the solution to reduce risk while minimizing customer disruption. The first layer was made up of measures which used dual neural network scoring models and rules to identify potentially fraudulent transactions. This layer initiates steps to contact the Delta Community member to determine whether fraud has occurred.
The second layer brought in Managed Real Time, Visa DPS's proactive real-time decisioning tool. With MRT, transactions are analyzed as they happen to pinpoint and decline those transactions most likely to be fraudulent. Using Visa's experience in spotting likely fraud, large numbers of suspicious transactions were immediately declined, protecting the customer and reducing Delta Community's fraud losses.
Having MRT in place then gave the credit union the opportunity to add the final layer–a client-managed solution called Risk Services Manager (RSM). RSM is an easy-to-use web-based application that allows issuers to independently develop and manage targeted fraud strategies; it includes rule development, testing against historical data and publication to production. Now Delta Community had the option to deploy targeted rules on the fly to combat fraud patterns that are unique to their portfolio.
"The beauty of this three-layer approach is that it's dynamic," Rick observed. "Visa DPS has rules that can be updated 24/7 in response to the ever-changing fraud environment. So Delta Community now has a true multi-layered fraud mitigation solution that gives them new powers to implement rules to battle today's and tomorrow's fraudsters."
When the Managed Real-Time system went live, the credit union had a team ready to take member calls 24/7 to handle any false positive transaction rejections. To their surprise, the number of calls was minimal. Julie reported: "It just proves how accurate Visa's Managed Real Time really is–it is very clean."
As the deployment jitters disappeared, so did the fraudulent card transactions. Delta Community saw a dramatic reduction in fraudulent loses after chargeback recoveries–over 60%. Before Julie and Rick joined forces, the credit union was frequently seeing accounts with five or more fraudulent transactions per fraud event. After implementing MRT, accounts like those were increasingly rare.
Julie was thrilled with the results. "I can't tell you how good of a feeling it is when you actually see an account with fraudulent activities that we didn't take a loss on–because we denied all the right transactions."
Delta Community was close to 20 basis points in fraud losses prior to implementing the Visa DPS Managed Real-Time and Risk Services Manager systems. At the end of Q1 2013, their YTD net for debit cards was 5 basis points after their chargeback recoveries.
"We definitely saved millions of dollars," Julie said. "We feel much more like we are 'winning' now than we did in previous years. Fraud is a daily battle, but now we have the tools to fight it from Visa DPS." Multi-layered, real-time fraud management was the perfect solution for Delta Community Credit Union's international member reach, but Visa DPS products like Managed Real Time and Risk Services Manager can be ideal for every issuer. Because stopping fraudulent transactions as they happen keep losses in check–and being able to do that with minimal cardholder disruption makes everyone happier.