1. Fair Isaac, Falcon Fraud Manager and Debit Card Fraud Ryan Ganji Falcon Product Management Global Fraud Solutions [email_address]

3. We make decisions smarter Fair Isaac is the leader in Enterprise Decision Management powered by advanced analytics #1 in Worldwide Analytic Applications Software Revenue

4. Among our clients 4000

8. Fair Isaac’s Falcon Software Has Contributed To The Industry’s Success Combating Fraud U.S. fraud losses, as a percentage of sales, have declined from a peak level of over 18 basis points in 1992, to 6.25 basis point in 2005 Falcon Introduced Credit Card Fraud Source: Nilson data

10. Fraud’s Four Key Dimensions Deposit Account Securities Loans Criminal Employee Criminal Outsider ATM POS Teller Window Telebanking and Call Center PC Account File Changes Info Gathering Account Debit Account Credit Mail Account Opening Mobile Credit Card Criminals Products Access Methods Activity Customer

12. Fair Isaac Protects the Whole Lifecycle Account Opening Account Access Real-time Monitor and Response Suspect Case Management Investigations Recovery Fair Isaac Fraud Solutions Lost and Stolen First Party Identity Theft Flash Fraud Cross-Channel Cross-Line Phishing Employee Collusion Hacking Fraud in New Markets Counterfeit Mass Compromise Premeditated Credit Abuse

14. Fair Isaac Falcon Fraud Manager Solution

18. Benefits of Analytics Focus effort on transactions with highest likelihood of fraud Good transactions Fraud transactions No protection – fraud/good transactions mixed and difficult to identify Rules-based solution - some fraud captured, but much is missed and still lot of good transactions captured as well Analytics-based solution – most of fraud captured, with minimal good transactions

19. Fraud Accounts Score Higher Score Range Illustrative Score Distribution and Detection Rates Fraud Accounts Non-Fraud Accounts

23. Patented Profiling System $ $ $ $ * $ $ # $ Falcon Profiling System Deposits Non-monetary Transactions ATM & POS Authorizations Customer Master Changes # Updated Profile To models

25. Enterprise Fraud Open Platform Bank Data Warehouse Online Banking & Telephony Access Branch ACH & Wire Transfers Application Originations Credit Card Transactions Channel Models, Rules, Profiles Scoring Module Source Systems Bill Pay Checks On us & Deposits Customer Model, Merchant Model, Rules, Profiles Research Module Modules Control APIs, rules, queues, hotlists Management Module Mobile Payments Fraud Risk Research Analysis & Investigations Debit Card Transactions Third-Party Case Intervention Case Database Case Module Intervention Case Database 3 rd Party Data Third-Party Detection Engine Consortium Outlier Bank Third-Party … Acquirer

27. Falcon Fraud Manager for Debit

28. Incidence of Debit Fraud Growing INCIDENCE RATES FOR EXISTING CARD FRAUD BY TYPE Source: Javelin Strategy & Research, 2008 Identity Fraud Report

29. Amount of Debit Fraud Increasing TOTAL ANNUAL FRAUD AMOUNTS FOR EXISTING CARD FRAUD BY TYPE $ Billion Source: Javelin Strategy & Research, 2008 Identity Fraud Report

34. PIN Points of Compromise Source: Fair Isaac CardAlert Fraud Manager PIN Points of Compromise 2001-2007 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2001 2002 2003 2004 2005 2006 2007 ATM-Bank ATM -NonBank POS

36. 2007 POS Points of Compromise

38. ATM Points of Compromise Source: Fair Isaac CardAlert Fraud Manager

39. 2007 FI ATM Points of Compromise

41. Predictive Lift from Device Profiling 80% relative performance lift in real-time value detection at a 10-to-1 false positive rate for Debit Cash Transactions Cardholder + ATM Profiles Cardholder Profiles

42. Predictive Lift from Merchant Profiles 40% relative performance lift in real-time value detection at a 10-to-1 false positive rate Cardholder + Merchant Profiles Cardholder Profiles

43. Conclusions

47. THANK YOU