When I talk with fraud managers, they often express concern that the benefits of a reputation-based system won’t be instantly apparent. While a reputation service inherently becomes more valuable over time as companies log their fraud experiences into the system, it’s worth pointing out that device recognition and device reputation provide a number of benefits that can have an immediate effect, such as the following:

• Expose relationships between transactions –Device recognition gives fraud management teams instant visibility into the relationships between all online transactions (fraudulent or not). This provides immediate value in assisting with investigations and resolving issues.
• Receive velocity alerts –The number of purchases, applications, account creations, etc. that originate from one user in a given period of time is highly indicative of fraudulent behavior. For example, wouldn’t it be valuable to know that in the span of one hour, ten credit card applications were all submitted by one person? Unfortunately, since most fraudsters use fake or stolen identities, this can be incredibly hard to detect—unless you focus on the device. With device recognition, you can monitor the velocity of transactions coming from a single device, regardless of the identities provided.
• Identify risky devices –Using a device reputation service allows you to benefit from an increased understanding of the correlation between device attributes and behavior. At iovation, we’ve processed over 2.4 billion online transactions and we’re able to use that information to profile and analyze which device characteristics are mostly likely to indicate fraudulent behavior. With this kind of device intelligence, you’ll be a step ahead by knowing which transactions to review more closely—even if a device has never visited your site before and doesn’t have a known history of fraud or abuse.
• Recognize scammers who have defrauded your peers –From the time you turn on a device reputation service (if it is a shared system, like iovation’s), you immediately have access to the fraud experiences of other companies who subscribe to the service, so if a device accessing your site has already committed fraud elsewhere, you’ll be able to know about it and protect yourself.
• Expose repeat offenders – The ability to identify repeat offenders—who often successfully evade identity-based checks— is one of the key reasons people adopt device reputation systems. It’s like having a wanted poster for the scammer’s PC. If you have been defrauded, you certainly don’t want to let that user back even if they try to mask their identity.

There are significant benefits from using device reputation and many of these benefits can be seen immediately. Device reputation is an essential component of a best practice fraud management system.

Tags: device recognition, device reputation, devide reputation, fraud transactions, online scammers, risky computers, velocity alerts

This entry was posted on Tuesday, November 10th, 2009 at 2:37 pm and is filed under Financial Services, Online Communities, Online Gambling, Online Gaming, Online Retail, Technology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.