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PULSE Rolls Out Debitprotect(SM) Fraud Detection System

October 02, 2007

Neural Network-Based System Proactively Detects Suspicious Debit
Card Transactions, Electronically Alerts Card-Issuing Financial
Institutions

HOUSTON--(BUSINESS WIRE)--Oct. 2, 2007--Financial institutions, merchants and consumers alike stand to benefit from DebitProtect, a fraud detection and notification system being implemented across the ATM/debit network of PULSE EFT Association, a Discover Financial Services company.

PULSE has launched its new neural network based fraud detection system across its entire network, following a three-month beta development program involving several financial institutions. DebitProtect provides risk scoring for all PULSE PIN, signature and PINless debit transactions on the PULSE network and notifies designated financial institution personnel via e-mail of possible fraudulent transactions.

"Because debit cards are used differently than credit cards, PULSE designed the DebitProtect system based on a highly customized data model developed specifically for debit portfolios," said PULSE President Dave Schneider. "This neural model will be continuously refined utilizing fraud data obtained from PULSE issuers. In addition, the service was developed for ease of use and does not require any technical changes on the part of PULSE participants. As a result, financial institutions large and small will benefit greatly from the service -- the broadest of its kind implemented at the EFT network level."

DebitProtect is the latest addition to the suite of anti-fraud solutions PULSE offers its more than 4,400 financial institution participants. These products include card security code checking services and targeted authorization blocking.

"At PULSE, we are committed to helping our participants combat debit card fraud," said Schneider. "We believe DebitProtect is a superior fraud detection solution that will significantly reduce the risk of fraud losses for all PULSE participants over time."

Debit transactions in the United States have tripled since 2000, and reported debit card fraud has increased. PULSE's 2007 Debit Issuer Study revealed that U.S. financial institutions lost an estimated $662 million to debit card fraud in 2005. The PULSE DebitProtect system will assist financial institutions in identifying and responding quicker to possible debit card fraud.

Organizations that participated in the beta development are pleased with the results.

"The day we went live with PULSE's fraud detection system, it helped us identify three fraud cases and saved us more than $13,000 in attempted fraudulent transactions," said Laurinda Thomas, loss prevention manager for First Technology Services, Inc., one of the DebitProtect beta participants. First Technology Services is a wholly owned subsidiary of First Financial Bankshares and provides technology services to First Financial's 10 banks.

"DebitProtect helps us catch fraud situations sooner than it would typically take for the bank or the account holder to become aware of the situation, thus reducing our losses," Thomas added. "In addition, our cardholders appreciate the fact that their bank is watching out for them."

How DebitProtect Works

DebitProtect uses advanced neural network technology to evaluate key transaction characteristics against a customized and constantly evolving risk model built from actual transaction data. The DebitProtect system is able to "learn" fraudulent behaviors and identify suspicious transactions that either are outside of established cardholder patterns or match known fraud behaviors.

Risk scores are derived from card usage patterns, pre-defined modeling parameters and data from the transactions themselves. Scores that exceed a preset threshold trigger alert e-mails that are sent to issuing institutions. System users then log onto a secure Web site to review information about the suspect transaction, classify it as either fraud or not fraud, and determine the next course of action based on the institution's fraud mitigation policy.

PULSE's DebitProtect system is being implemented in two stages. The phase 1 rollout provides PULSE-participating debit card issuers with near-real-time transaction monitoring and e-mail notifications 24 hours a day, 7 days a week. When phase 2 is implemented in the fourth quarter of this year, PULSE plans to support automatic blocking of transactions based on rules and parameters established by the issuer.

About PULSE EFT Association LP

PULSE is one of the nation's leading ATM/debit networks, currently serving more than 4,400 banks, credit unions and savings institutions across the country. PULSE is owned by Discover Financial Services (NYSE:DFS). The network links cardholders with nearly 260,000 ATMs, as well as POS terminals at retail locations nationwide. The company is also a valued resource for consumer research related to electronic payments and is committed to providing its participants with education on evolving products, services and trends in the payments industry. For more information, visit www.pulse-eft.com.

CONTACT: PULSE
Anne Rhodes, 832-214-0234

SOURCE: PULSE EFT Association LP