Magazine article American Banker

Nestor Offers Pattern-Recognition Software for Fighting Card Fraud

Magazine article American Banker

Nestor Offers Pattern-Recognition Software for Fighting Card Fraud

Article excerpt

Nestor Inc. is touting Prism, its new pattern-recognition software, as a breakthrough in credit and debit card fraud prevention.

The Providence, R.I.-based company, which introduced the system at last week's Card Securities Conference in Chicago, said Prism adds to the neural-network technology widely used for fraud detection.

"We've gone beyond just fraud reduction" by adding monitoring systems other than neural networks, said Sushmito Ghosh, Nestor's vice president of risk management.

Neural networks are meant to mimic the learning and pattern- recognition functions that the brain performs. Credit card banks have reduced fraud losses by subjecting transaction data to neural pattern analysis.

Prism uses advanced pattern-recognition technology to read an electronic stream of card transactions and detect accounts or transactions with a high probability of fraud. The software combines neural technology with features such as statistical analysis and rule-based systems of fraud detection to reveal suspect amounts or transactions, the company said.

The rule-based component compares each transaction with a set of conditions that embodies profiles of suspect activity. For example, it monitors how many times a card has been used in one day and whether the card passes its credit limit in that same day.

"Since fraud is a transient behavior, once the fraud-prevention manager detects a fraudulent scheme, it often changes," said Mr. …

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