From: strick -- henry strickland <strick@versant.com>
Date: Wed, 25 Aug 93 08:42:08 PDT
To: cypherpunks@toad.com
Subject: Visa, HNC Inc. develop neural network as a weapon to fight fraud
Message-ID: <9308251540.AA19232@versant.com>
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Extracted from "FC NEWSBYTES 1.3", David Geddes <dgeddes@NETCOM.COM> Editor,
	where FC = FutureCulture mailing list <FUTUREC-request@UAFSYSB.UARK.EDU>.    strick
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B Y T E 4:

Visa, HNC Inc. develop neural network as a weapon to fight fraud
SAN FRANCISCO (AUG. 10) PR NEWSWIRE - Visa International and HNC Inc. have
announced a strategic agreement to develop a comprehensive merchant risk
detection system.  The new system will be designed to better control fraud at
the merchant level by determining the risk associated with individual card
transactions.

This agreement continues to support Visa International's active role in
developing effective solutions to the problem of fraud occurring at the point
of sale.  The merchant risk detection system will be available in 1994.

"Visa has combined its core systems capabilities and the premier technology
available -- neural networks -- for fighting credit card fraud," explained
Roger Peirce, Visa International's executive vice president, Delivery Systems.
"HNC, an industry leader in neural network applications and credit card
control services, is a logical partner for Visa," he added.

Michael A. Thiemann, HNC's executive vice president, called the agreement
"another example of our commitment to solving tough business problems through
the application of cutting-edge technologies."

Neural network technology enables a system to predict the probability of fraud
by learning from a large number of past transactions, both legitimate and
fraudulent.  By using neural networks to its full extent, Visa will be able to
provide superior risk analysis for its members.

In combating credit and debit card fraud, Visa already has developed several
programs utilizing information gained from neural network research.  Worldwide
implementation of the International Points-of- Compromise (IPOC) program has
proved highly effective for identifying merchant locations that may be selling
or giving account information to counterfeiters.  Another successful program,
called the Central Deposit Monitoring (CDM) program, matches merchant activity
with sales draft laundering characteristics and identifies unusual merchant
deposits. In addition, close cooperation with law enforcement agencies and
legislatures enhances the value of the programs which, in turn, allow Visa
members to pass on the protection to its cardholders and merchants.

The planned Visa-HNC merchant risk detection system is designed to further
reduce fraud losses by assigning a risk score to each authorization
transaction processed through the VisaNet systems.  "With this new system,
members will be better able to assess risk at the point- of-transaction and,
therefore, make more informed authorization decisions," confirmed Peirce.
According to The Nilson Report, merchant fraud worldwide cost the financial
industry an estimated US $689 million in 1992.

HNC will integrate the risk score into Falcon(TM), their existing, real-time
credit card fraud-detection system that runs at card issuer sites to identify
and prevent a wide range of fraud at the cardholder level. It determines the
probability of fraud on each credit card authorization by comparing it to the
cardholder's purchase patterns and the latest trends in credit card fraud.
Introduced in September 1992, Falcon has already achieved success in reducing
fraud losses of major credit card issuers.

HNC Inc., the world's leader in the application of neural networks, develops,
sells, integrates and supports advanced decision solutions based on neural
network and statistical technology. HNC provides practical products and
services to the financial, credit card, debit card, merchant services,
insurance, mortgage underwriting, retail and direct marketing industries.

Visa is the leading consumer payment system in the world with more than 10.4
million acceptance locations, the largest global ATM network and 309 million
cards issued worldwide.

-0-                          8/10/93 /CONTACT:  Gail Murayama of Visa
International, 415-570-3645; or Ken Jones of HNC Inc., 619-546-8877

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