Eye on Mobile: Mobile Devices Becoming More of a Retailer Ally in Authenticating Online Consumers

Smart phones may become a strong ally to fraud-plagued e-commerce merchants in helping to verify the location and identity of an online shopper. Online fraud is often committed by criminals who manipulate their computer’s location data and other attributes to make it appear they are who they say they are, and are located where the legitimate customer is supposed to be.

Now, merchants have new tools to use smart phones to verify identity and location. One such service, announced this week by Zumigo Corp. at the annual Merchant Risk Council conference in Las Vegas, can locate a consumer’s smart phone, and, in conjunction with other technology, can verify the consumer’s identity and credit card credentials.

The service verifies the consumer’s identity using data from mobile carriers and credit-reporting agency Equifax Inc. That enables an address check and to see if the cardholder details being used for the transaction match ownership details about the mobile phone. And, using geo-location, the service can pinpoint the mobile phone’s location relative to the computer the consumer is shopping from, says David Pinski, vice president of product management at San Jose, Calif.-based Zumigo.

Zumigo can provide merchants a score based on its data or the raw data itself for incorporation into a merchant’s data system, he says.

Vendor Whitepages Inc., a Seattle-based online data provider, also offers identity-checking services to merchants. Currently available in the United States and Canada, the service draws upon billions of data records to create a linked record of each element. Whitepages’s data partners include the mobile carriers and the U.S. Postal Service, says Tom Donlea, Whitepages director of risk services.

As the service, which Whitepages calls “Speed to Clear,” expands internationally, it will rely on mobile-phone data, social media and email addresses because that’s what merchants are focusing on, according to Donlea. Most e-commerce retailers, especially those smaller than the top 250, usually rely solely on address verification, or AVS, as a primary fraud-prevention tool, Donlea says.

Mobile, whether it’s used as a verification tool or as a means of commerce, has broad implications for online retailers, says Monica Eaton-Cardone, chief operating officer of Chargebacks911, a Clearwater, Fla.-based chargeback-mitigation service. She says there’s been a spike in friendly fraud and criminal fraud from mobile commerce.

“It goes back to looking at all sides of the equation,” Eaton-Cardone tells Digital Transactions News. Looking at consumer purchase data in relation to chargebacks based only on their mobile attributes or Web-based attributes could shortchange a merchant. “The issue we want to target is making sure we have all of the relevant information,” she says. “Unless you have the rest of it, you don’t know what the problem is.”