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Big data is your best friend in preventing credit card fraud

Written by Maryalene LaPonsie
Posted On: April 12, 2013

One minute you are a mild-mannered suburbanite, the next you are jetting to India and buying a pet bulldog. Or at least, that's the story your credit card statement might show if you are the victim of fraud.

Fortunately, the good folks at Visa have kicked their efforts into overdrive to prevent credit card fraud. Their efforts have been so good, in fact, that they estimate they annually identify $2 billion in potential fraud opportunities. The secret behind their success? Big data.

Harnessing the power of big data

If big data sounds a little like Big Brother, you may be partially right. Big data is a term that is used to describe the huge amount of information we produce each day, month and year -- from your tweets to your town's traffic surveillance videos.

In terms of credit card fraud, card issuers aren't looking at (or even privy to) your driving habits -- except as they relate to your purchases. Big data is what alerts Visa there may be something questionable about a gas purchase in California when you typically fill-up at a Utah station twice a month.

According to a Wall Street Journal article, the analytical platform launched by Visa in 2011 can look at up to 500 aspects of a transaction. In addition, the platform operates on 16 different analytical models that take into consideration the type of transaction, geographic location and other criteria.

For comparison, Visa's old system used only one model that considered 40 aspects of the transaction. The changes have allowed the company to analyze nearly all its transaction versus the two percent it used to review.

Never fear: Visa is an ethical company

Unlike Big Brother, it seems as though your data is in good hands with Visa. The company was named one of the most ethical companies in the world by the Ethisphere Institute.

The institute considered the following criteria when selecting the most ethical companies:

  • Ethics and compliance program
  • Reputation
  • Leadership and innovation
  • Governance
  • Corporate citizenship and responsibility
  • Culture of ethics

In announcing Visa's inclusion on the list, the Ethisphere Institute executive director, Alex Brigham, said in a press statement: "Visa Inc. continues to set the bar within its industry for a number of its ethics programs. As more companies each year strive for recognition, Visa Inc. was added to World's Most Ethical 2013 by demonstrating its strong commitment to ethical practices."

All in all, the institute selected 145 companies for its 2013 list. The companies cover a diverse set of industries and in the realm of financial services, Visa is joined by fellow card issuer American Express.

If the thought of a business sifting through big data to analyze your purchases and spending habits makes your skin crawl, take comfort in knowing Visa is only making better use of the information to which you already given them access. Plus, the efficient use of big data may be the only thing standing between you and statement full of fraudulent charges for a Caribbean cruise and a pair of (not so) cheap sunglasses.

Posted in Visa Credit Card
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