Latest fraud fighting tool – the end user?

A conclusion reached by Chicago-based telephonic authorization technology firm Authentify Inc. may surprise payments industry security professionals. When Authentify analyzed the results of its 2012 Faces of Fraud Survey, the company found that only when banks supply consumers with fraud monitoring tools will data security reach its highest level of protection.

The survey, which polls banks on the latest fraud trends and deterrence strategies, said 82 percent of fraud incidents reported to banks were originally detected by consumers. Therefore, banks must change their mindset about the role of their account holders in the fraud fight.

"Many banks put anti-fraud measures in place that are invisible to the account holder so as not to be an inconvenience," said Peter Tapling, President and Chief Executive Officer at Authentify. "Customers need to be given more credit – they know what is supposed to be happening in their account and can recognize a fraudulent transaction right away."

'Out-of-band' technology on the rise

Advances in technology and the proliferation of smart phones and tablet computers, allow banks to more effectively engage consumers in fraud mitigation strategies, Authentify added. One strategy is for banks to offer customers out-of-band solutions – technology that functions in the mobile realm on a data transmission channel separate from the primary channel, but that works in unison with data on that primary channel to authenticate users.

Authentify offers such technology in the free 2CHK application downloadable to mobile devices, which enables account holders to review and approve legitimate transactions, and cancel potentially fraudulent ones.

The survey, conducted by Information Security Media Group Corp., said one third of respondents indicated they planned to invest in out-of-band authentication technology in 2012; 70 percent indicated stronger authentication layers have already been implemented.

"From the [survey] results, it seems that banks are starting to recognize how valuable it can be to both engage and more strongly authenticate the end user," Tapling said. "By taking these steps, the bank strengthens the relationship and achieves an overall higher level of trust."

According to the survey, the three leading channels for fraud are:

• Card-not-present transactions (56 percent)
• Data breaches at retailers or processors (53 percent)
• POS skimming (47 percent)

Authentify will host a webinar on the survey results April 25, 2012. For more information, go to www.authentify.com/2chk/ .

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