Common use of Fraud Detection Clause in Contracts

Fraud Detection. First Data shall provide RCSI and RCSI’s Transaction Card clients with credit card fraud management and fraud detection services (the “Fraud Detection Services”), which shall be as of the Effective Date in conjunction with HNC, Inc., and its Falcon™ software (the “HNC Software”), which services shall consist of those services set forth in this Section. (A) First Data shall provide RCSI with Fraud Detection Services by utilizing the output of the “Falcon Neural Engine” computational model (designed to detect credit card fraud) which encompasses or contains the Falcon credit neural network-based system, as such software is licensed to First Data by HNC and is commonly known as the “Falcon Credit Card Fraud Detection Model” (hereinafter referred to as the “Credit Card Output Access”) solely for the purpose of assisting RCSI in detecting possible fraudulent transaction account activity on the Cardholder accounts of RCSI and for no other purpose. Except as expressly provided in this Section, no right or license under any patent, copyright, trade secret, trademark or other intellectual property of First Data or other person is granted or is to be inferred Table of Contents from this Section. RCSI agrees that First Data’s providing of Fraud Management/Fraud Detection Services does not confer upon RCSI any license in or to the Falcon Credit Card Computation Model. (B) First Data and RCSI acknowledge First Data’s representation that the HNC Software, from which the Credit Card Output Access is generated, is licensed to First Data pursuant to a license agreement (the “HNC License Agreement”). First Data shall use Commercially Reasonable Efforts to extend or renew the initial or any renewal terms, as the case may be, of the HNC License Agreement and if the HNC License Agreement expires or is terminated, First Data shall promptly notify RCSI of such termination or expiration. First Data shall use Commercially Reasonable Efforts to substitute for HNC one or more software vendors from whom First Data shall license, on commercially reasonable terms, one or more software packages that will generate output access that provides, in all material respects, the utility and performance provided by the Credit Card Output Access generated by the HNC Software. (C) First Data shall assist RCSI in establishing fraud detection strategies (“Falcon Fraud Strategies”) on-line to fulfill RCSI’s fraud detection requirements. These Falcon Fraud Strategies will be available on-line for review. (D) Together with HNC, upon RCSI’s request, First Data will provide RCSI with the following call processing Services (the “Call Processing Services”): (1) First Data will monitor authorizations queued as a result of the Falcon Fraud Strategies and/or fraud score. (2) First Data will initiate outbound telephone calls to the Cardholders of RCSI who have had authorization activity on their Designated Account and appear in a Falcon queue group (the “Falcon Queue Group”). At RCSI’s option, First Data shall either (i) use a predictive dialer (a mechanism by which outbound calls to the Cardholder accounts to be worked hereunder are automatically dialed by the system based upon the telephone number indicated by the Cardholder master files of RCSI resident at First Data) to place calls or (ii) manually review accounts for fraud activity (based upon RCSI-defined criteria) in order to call only selected accounts. Table of Contents (3) First Data will make up to four (4) attempts to reach the Cardholder within a 48-hour period. All attempts will be made within the hours of 8:00 a.m. and 9:00 p.m. in the time zone of the Cardholder’s address on file. (4) First Data will attempt all home and business telephone numbers as provided by RCSI’s Cardholder masterfile. (5) If First Data is unable to contact the Cardholder, a message for the Cardholder to contact First Data at a to-be-provided toll-free number will be delivered to the Cardholder’s home message machine and/or to responsible adults. (6) When the First Data call results in contact with the Cardholder, and the Cardholder validates the authorization activity, First Data will record an on-line account memo (to the “RCSI Inquiry System”) indicating the results of the call. (7) When the First Data call results in contact with the Cardholder and the Cardholder is unable to validate the activity, First Data will initiate a lost/stolen report (the “Lost/Stolen Report”) and place a block on the account. First Data will record an on-line account memo (to the RCSI Inquiry System) indicating the results of the call. (8) If First Data encounters activity which appears uncharacteristic or unusual for a Cardholder Designated Account and First Data is unable to successfully contact the Cardholder, then First Data may place a block on the Cardholder Designated Account to prevent further authorization approvals until either the Cardholder or RCSI successfully verifies the activity. On a daily basis, First Data will make available to RCSI via a real-time online system the current list of Designated Accounts which have been blocked because of uncharacteristic or unusual account activity. The Designated Account will remain blocked until RCSI removes or instructs First Data via the real-time online system to remove such block. Table of Contents (9) Upon the request of RCSI, First Data shall provide additional services, including the following: telephone number look-ups, inbound call processing after the 48-hour period, fraud control services, customized reporting, etc. (10) Upon RCSI’s request, at least annually, First Data shall require HNC to analyze month-end reports within the 12-month period being produced by the HNC Software that measure the effectiveness of RCSI’s existing algorithms within the Falcon model, provided that RCSI has over 200,000 Designated Accounts that are Active Accounts. First Data shall then provide to RCSI HNC’s written analysis of the reports interpreting the performance of the existing algorithms and strategies within the Falcon model and written recommendations for changes or updates to such algorithms or strategies to improve their performance, provided that RCSI promptly provides First Data with the two necessary month-end reports. (11) At RCSIs request, First Data, through HNC, shall provide RCSI with up to five (5) hours per month, for the first six (6) months following the date of commencement of Fraud Management/Fraud Detection Services (the “Falcon Start Date”), and three (3) hours per month thereafter, of score-related assistance over the telephone at no additional charge, provided that RCSI has over 200,000 Designated Accounts that are Active Accounts as of the Falcon Start Date. If such service exceeds the hours permitted for that particular month, First Data may be entitled to charge RCSI for such services as set forth in Schedule C. First Data shall make appropriately qualified First Data Personnel available to RCSI consult with RCSI on fraud strategy management upon RCSI’s request. (12) Upon request by RCSI, First Data shall provide the following to RCSI: custom system installation, additional training, and fraud user interface licensing. First Data, through HNC, shall provide custom fraud models to RCSI upon request. Table of Contents (13) HNC has established a fraud control consortium (the “Fraud Control Consortium” or “Consortium”) whereby users of Card Output Access contribute data for use by HNC to study fraud patterns, which enables HNC to improve fraud detection methods. If RCSI chooses to join such Consortium, First Data, upon request of RCSI, shall provide RCSI data to the Fraud Control Consortium as required within thirty (30) days after the Falcon Start Date and on a calendar quarterly basis thereafter. If RCSI does not wish to join the Fraud Control Consortium, First Data, through HNC, upon request of RCSI shall construct a custom fraud model for RCSI, as an additional service, at a cost agreed upon among First Data and RCSI. RCSI acknowledges that First Data will employ the HNC Software using the Fraud Control Consortium algorithms to produce Credit Card Output Access for RCSI only if RCSI contributes data to the Fraud Control Consortium. (14) First Data shall cause HNC to provide, once every calendar quarter, a review of the consortium model which will identify changes in fraud trends and if such changes are of statistical significance, then First Data shall cause HNC to update the consortium model. (E) Notwithstanding any other provisions of the Agreement, RCSI may terminate the Credit Card Fraud Management/Fraud Detection Services hereunder upon thirty (30) days written notice to First Data.