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VISA INTERNATIONAL SLOWS COUNTERFEIT FRAUD LOSSES WITH CVV DETECTION PROGRAMS

 VISA INTERNATIONAL SLOWS COUNTERFEIT FRAUD LOSSES
 WITH CVV DETECTION PROGRAMS
 SAN FRANCISCO, July 23 /PRNewswire/ -- Fighting back against the new wave of "electronic counterfeiting," Visa International's member financial institutions are beginning to halt the growth of counterfeit fraud by equipping their cards and merchants with new Card Verification Value (CVV) technology.
 The bank card association is further bolstering the effort by monitoring Visa merchants worldwide and placing special fraud-detection terminals in high
risk locations. "In the Asia-Pacific region, CVV is helping us stop more than half a million dollars in counterfeit losses every month," said Visa International's William D. Neumann, senior vice president of the Risk Management and Security division.
 "Electronic counterfeiting" involves criminals altering magnetic stripes or manufacturing phoney ones from scratch, encoding them with account information they have obtained illegally. This fraud accounted for $39 million in losses last year for Visa members worldwide.
 But with CVV, which utilizes a counterfeit-proof algorithmic code embedded in the magnetic stripe itself, financial institutions are able to verify the authenticity of every magnetic stripe when a card is swiped through a point of sale terminal during the course of a routine transaction.
 When Visa first observed the emergence of this kind of counterfeiting in the late '80s, Neumann said, Visa began rolling out the technology to its members worldwide. In the Asia-Pacific region, where much of the world's electronic counterfeiting is perpetrated, Visa required its members to begin migrating all their cards and merchants to the CVV technology. Today, 60 percent of all Visa card transactions in the Asia-Pacific region can be verified with CVV technology. While counterfeit losses still occur, the region's share of the total worldwide counterfeit losses dropped to 26 percent in the fourth quarter of 1991, compared to 46 percent the year earlier.
 Part of the reason for the shift is that counterfeiters, frustrated by the success of CVV in Asia-Pacific, have begun trying to pass their fake cards through merchants located in other regions of the world, explained Neumann. This effort is ultimately doomed to fail because all Visa cards will be protected by CVV by the middle of 1993, he said.
 "In fact, our CVV technology poses such a threat to their livelihood, electronic counterfeiters appear to be shifting more of their attempted fraud
on to other brands," said Neumann. To further support the CVV technology, Visa launched its Terminal Placement Program earlier this year to protect a small number of "high-risk" merchant locations from electronic counterfeiting. "We are currently monitoring our merchant base worldwide to detect evidence of counterfeit activity," said Neumann, disclosing that Visa identifies merchants which are found processing counterfeit transactions into the VisaNet Delivery System.
 "After we check to make sure that a merchant identified is not actually participating in the fraud, we require the installation of a special POS terminal on site to process all subsequent transactions and nab any counterfeit cards that don't have the proper CVV coding," he said.
 Currently, the program is in the process of installing more than 4,000 terminals at merchant sites throughout the world. Visa expects the number of terminals to grow in the months ahead, further reducing counterfeit fraud.
 Card Verification Value is part of the broad range of risk management and payment service strategies Visa International is implementing worldwide. Visa, with 10 million acceptance locations and 282 million cards issued, including 142 million in the United States, is the world's largest consumer card payment system.
 -0- 7/23/92
 /CONTACT: Gregory J. Holmes of Visa International, 415-570-2107/ CO: Visa International ST: IN: FIN SU: PDT


RM -- SF007 -- 2546 07/23/92 12:49 EDT
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Date:Jul 23, 1992
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