Looking to fight what it calls “digital shoplifting,” VeriSign, Inc. Wednesday launched its Fraud Protection Services.
The initiative is designed to help protect online merchants from losses such as the use of stolen or bogus credit card numbers. Mountain View, Calif.-based VeriSign has a vested interest since it offers products for network security and online payment processing, while its Network Solutions subsidiary handles domain name registration for the .com and .net top-level domain.
Online fraud is growing faster than e-commerce itself, VeriSign chairman and CEO Stratton Sclavos during a conference call to reporters noting it was up 114 percent in 2002.
“As we’ve seen a shift in the economy to an online environment and digital commerce, we’re also seeing a shift in where crime happens,” Sclavos said.
Sclavos said his new Fraud Protection Services bring pattern recognition and advanced filtering applications to bear on several combined sources of information proprietary to VeriSign in order to identify suspicious shopping patterns. Data sources include the IP addresses in the .com and .net domains and transactions and fraud reports from the 89,000 customers of its online payment services.
“You have a much better chance of catching a crook if you can follow his or her activities across sectors and industries,” Avivah Litan, vice president and research director, financial services for research firm Gartner said. “VeriSign sits on a wealth of information that’s already been used to catch a lot of criminals.”
Nearly half of the 263,000 fraud complaints received by the Federal Trade Commission last year were Internet-related, while the Internet Fraud Complaint Center referred nearly 48,000 Internet-related fraud complaints to law enforcement. Gartner predicts that over $1 billion in commerce will be lost to fraudulent online transactions in 2003, while VeriSign estimates that fraud costs Internet merchants more than seven cents on every dollar.
Independent of VeriSign, the FTC is also working hard to crack down on false claims made by e-tailers. Just this week, the federal agency settled its with retail company Guess, Inc. over charges that it exposed consumers’ personal information, including credit card numbers, to computer hackers, contrary to the company’s claims.
The Fraud Protection Services have been in development for two years, Sclavos said, and were tested by customers of the company’s payment processing services, including the Dallas Cowboys Pro Shops and Webstore and Loews Cineplex theatres. While two years ago, 20 percent of transactions that VeriSign processed were fraudulent; Sclavos said that the new software had reduced it to 0.45 percent.
The new software supports MasterCard’s “SecureCode” and “Verified by Visa”, two programs that offer credit card security to online shoppers. But neither has significant uptake yet.
“Those programs are just beginning, so merchants can’t rely on them to prevent fraud,” Litan said. “They need something that covers 100 percent of their transactions.” VeriSign’s domain registry information, she said, “gives VeriSign a big edge against its competition.”