Big data is your best friend in preventing credit card fraud

By , CardRatings Contributor

Our credit card articles, reviews and ratings maintain strict editorial integrity; however we may be compensated when you click on or are approved for offers (terms apply) from our partners. How we make money.

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.


Be the first to comment!

Select Your Credit Score:
(Ok to Guess)
None/Limited I don't Know

Featured Partner Cards

  How is your credit?
Oops! Your credit does not qualify you for this card. Applying and being rejected for this card could possibly hurt your credit
We are redirecting you to offers you are qualified for based on your credit.
CardRatings is excited to announce the launch of the
100% Free CardRatings Email Course to Learn How to Maximize Travel Rewards.

Created in partnership with ChooseFI

We partnered with ChooseFI to combine CardRatings’ offer expertise with ChooseFI’s tried and true travel rewards strategies. Get to know ChooseFI: they have changed tens of thousands of lives and recently won Podcast of the Year at FinCon.
You may think you are a rewards travel expert, but rewards strategies are changing (e.g., the days of card churning and manufactured spending are numbered). Learn powerful, sustainable strategies (a couple of which even you die-hard travel experts might not know). You'll be so glad you did.
We're planning more courses for the future; this is just the beginning of our journey.