When it comes to managing risk for online transactions, we get a lot of questions about how our approach compares to other commercial solutions. Establishing business rules and risk scoring in combination with device reputation ranks high among topics of interest. Simply put, iovation uses the device and transaction data available to any vendor, and combines it with the strongest database of historical device risk data available on the market today.

Risk scoring, when you boil it down, is the simple process of taking the data you have available about a given transaction and the device requesting that transaction, and measuring characteristics that would lead you to believe that it is either valid or risky. Most device-based risk scores, including those offered by iovation, incorporate common types of risk elements in their scoring. These may include:

• Velocity-based Rules – Measuring device activity in a given time frame
• Transaction Anomalies – Device characteristics that indicate the device is masking its identity, such as using an anonymizing proxy, or disabling technologies like flash

What sets iovation apart is the growing network of businesses it protects that leverage and contribute to the Device Reputation Authority (DRA). This database of over 350 million device reputations is queried more than 5 million times per day by iovation clients.

The Device Reputation Authority contains historical information about specific fraud and abuse occurrences by the device used. We use this information to further assess transaction risk for our customers in the following unique ways:

• Global Account Associations – Looking at extended relationships between devices and shared accounts that are evident in fraud rings and targeted fraud
• Factual Evidence of Fraud – Whether the information comes from a close partner, a peer, or a company in a completely unrelated industry, direct evidence of fraud on a given device is one of the strongest correlations to transaction risk a customer can have.
• Profile Risk – Profiling harnesses the power of shared factual evidence in the reputation system to measure the similarity of the device in the current transaction to those devices that have been seen across iovation subscriber sites in the past. A high ratio of known bad devices in the set of similar devices is a very strong risk indicator.

These three risk elements are tremendously valuable to our customers who find over time that either factual evidence or profile risk are so strongly correlated with fraud that it can cut their review time down substantially for those transactions.

In the world of risk scoring, cloud services, and crowdsourcing, it is proven that leveraging information from larger affinity groups provides unmatched effectiveness. When a company is combating highly sophisticated fraudsters determined to defeat their defenses, what risk analyst wouldn’t want to know that a device trying to create an account or make a purchase had previously been flagged for fraudulent activity? Adding this data to risk scores increases their ability to shine light on fraud that might otherwise remain hidden.

When it comes to online dating scams, we all like to believe we learn from our own, and others, experiences. But according to new statistics on Romancescams.org, a website dedicated to fighting online romance scams, the average loss per person involved in a romance scam has climbed to a staggering $11,500. That’s up from a 2007 report where the advocacy group cited the average loss per victim was $7,900.

According to the article, “Website offers forum on avoiding romance scams,” fraudsters continue to successfully scam unsuspecting lonely hearts by using stolen credit cards to join online dating sites and set up fake profiles. From there, they quickly lure their victims off the dating sites and onto more personal lines of communications such as instant messaging and email before romance sites can discover the stolen credit card and pull their fake profiles. (more…)

With fraudsters better at hiding their true identities, it’s getting more and more difficult to know which online transactions to trust and which to reject. Would if you could confidently identify good transactions from the bad ones before they occurred? How valuable would this intelligence be in your ongoing efforts to reduce the risk of online fraud or abuse?

Join us for a live webinar, “Detecting High-Risk Transactions,” on Tuesday, July 20th. Learn how you can proactively assess risky transactions to better protect your business from more sophisticated schemes and elaborate fraud rings. Along with discussing the various techniques today’s cyber criminals use to hide their identities, you’ll learn more about the top 5 methods of detecting transaction risk, including:

Transaction Anomaly — Check mismatches, proxies and disabled components.
Velocity Rules — Know when activity counts have been met or exceeded.
Profile Risk — Check against aggregate profiles of risky accounts or devices.
Factual Evidence — Identify when known bad devices touch your website.
Account Associations — Identify and shut down fraud rings for good.

Register today at iovation.com/risk-mitigation.

We look forward to a very insightful, interactive discussion.

Despite all the warning signs and expert advice on how to avoid online dating scams, singles looking for partners online continue to be duped out of hundreds of millions of dollars each year. According to the article, “Online lonely-hearts scam is costing Britons millions of pounds,” online romance fraud has become so prevalent in Britain that the Serious Organised Crime Agency (Soca) is sending officers from its anti-kidnap and extortion units to help train police in areas where many of the mass-marketing romance scams originate, Nigeria and Ghana.

Romance scams have been around much longer than online dating sites. While the Internet has increased people’s chances of finding partners, it also provides a level of anonymity that enables fraudsters to hide their true identities to perpetrate any number of fraudulent or abusive activities against individuals and online dating providers. (more…)

As we continue to learn more about how cyber criminals operate, online businesses continue to seek out effective countermeasures against organized fraudsters committing fraud and abuse. Trying to fight fraud alone can be a losing battle. No matter how much information your business has collected to stop criminals, there is a growing number of sophisticated fraudsters out there who are constantly changing their identities and the profile of their computers, to perpetrate fraud across a multitude of verticals.

One of the most effective ways to defend your enterprise is by working together and sharing information with other fraud teams across multiple industries. Interacting with a centralized, global network of fraud intelligence arms you with information upfront to minimize your chances of having to take that first hit. (more…)

As many of the online game industry’s most respected leaders and innovators convene in Seattle next week for the LOGIN Conference, we look forward to seeing familiar faces and meeting new friends at this year’s event.

As always, the show will feature some of the industry’s top names sharing their ideas about advancements in technology and design, the future of digital games, and how online games and virtual worlds are helping solve real-world business issues.

iovation has a particular interest in this show because we actively protect over 20 gaming clients and their legitimate players from all forms of fraud and abuse. Each day, our device reputation technology helps more than 75 individual online games identify bad players in their virtual environments — and keep them from returning — to build a safer and more trusting online gaming experience for their good customers. (more…)

More evidence that cyber criminals are using personal information from social networking sites to create socially engineered attacks was recently disclosed when VeriSign iDefense reported a cyber crook was trying to sell 1.5 million Facebook accounts on an electric fraud Web forum. In the article, “1.5 Million Facebook Accounts for Sale in Web Forum, VeriSign Reports,” social networking credentials are gaining value in the cyber-underworld. According to Rick Howard, director of cyber-intelligence at iDefense, the more Facebook friends an account has, the more valuable the credential. (more…)

While the hot new iPad provides an exciting platform to surf the web, exchange emails and read books, users are also using the computer tablet to access their existing accounts on social networking sites, play virtual games, and make online purchases much like they would on their home computer.

This past week, iovation has seen a rapid adoption of the iPad being used at our customer sites. We’ve seen the number of iPad transactions grow by thousands every single day since the new device was made available. And these transactions aren’t just occurring within the same industry. In fact, we’re seeing iPad transactions on a multitude of verticals including travel sites, social networks, sportsbooks, dating sites, credit issuers, MMOs and online social games. And our job is to make sure that the transactions processed are from legitimate, good customers.

Topping the list of industries where we’ve seen the most online transactions this week is online communities at 45%, with the majority on social networking sites as opposed to dating sites. The second largest group was online retail, accounting for 28% of total iPad transactions. Most of those transactions occurred on travel sites. And lastly, international gambling sites such as sportsbooks came in third, at 23% of all iovation-protected iPad transactions.

So that’s where we’re helping customers, but what information do fraud teams share within our database in order to reduce fraud losses and ensure good customers have a positive experience on their site?

iovation tracks over 30 different types of bad behavior and this segmentation is important to our customers. How they treat evidence (specific types of fraud and abuse) changes across various industries. For example, an online retailer cares about mitigating chargebacks and catching criminal activity before product goes out the door, whereas an online community cares more about stopping spam, solicitations, predators and phishing attempts, in order to protect community members and maintain a safe and trusted environment.

Our customers can customize our fraud protection service to gain control over the specific transactions and activities that they correlate with high risk. This allows them to take more business with confidence and spend less time conducting costly manual reviews.

Believe it or not, within the first week of iPad sales, we have already uncovered fraudulent activity. Over half of all transactions denied from iPads were specifically related to credit card fraud. In other words, they were fraudsters attempting to monetize stolen identities on our customers’ websites.

As iPads connect to online businesses to create accounts, submit applications and make purchases, it is very important for organizations to know whether or not the device:

• has committed fraud or abuse on their site
• has committed fraud or abuse at another business
• has relationships with other devices or accounts that have been involved with fraud or abuse
• has not been seen before, but matches the profile of other high-risk or suspect devices

As iovation’s global shared database of over 275 million devices grows, so do the reputations of iPads used to request transactions. This is important information that companies can use to determine whether or not a transaction requested by an iPad, or any other Internet device, can be trusted and just the kind of information iovation provides to its valued customers.

The FBI recently released some interesting findings about cyber crime that confirmed what we suspected all along — cyber criminals are very business-like, working together, and operate like most other businesses that are out to make a profit. In the article, “The rise of Mafia-like cyber crime syndicates,” Deputy Assistant FBI Director, Steven Chabinsky, said a number of sting operations have uncovered the various roles individuals play within a criminal organization down to the specific titles and duties.

For example, Coders write the malware. Hackers are actively searching for vulnerabilities to exploit. Fraudsters create and deploy social engineering schemes. Hosters provide safe hosting of content on servers and sites. Techies maintain the infrastructure. And Leaders are the managers who keep the team together. (more…)

Last week, the Internet Crime Complaint Center (IC3) released its 2009 Annual Report on Internet fraud activity, and the results were staggering. According to the report, in 2009 U.S. citizens lost nearly $560 million to online scams. That number more than doubled the $265M in online fraud losses reported in 2008. The IC3, which tracks worldwide complaints of Internet fraud through its Web site, also said the total number of complaints in 2009 jumped 22% compared to 2008.

In the article, “Internet fraud’s U.S. price tag put at $550 million,” Donald Brackman, director of the National White Collar Crime Center (NW3C), said the growing figures can be largely attributed to increasingly sophisticated online schemes and cyber criminals’ ability to hide their true identities online. (more…)

The month of February provided another stark reminder that cyber criminals continue to be on the prowl in online dating communities.

According to a recent Toronto Sun article, “Money scammers target online daters,” Durham Regional Police received several reports—all during the weeks following Valentine’s day—from women claiming they had been scammed by men they met online. After several months of courtship and communications with these men, women then said they were asked to wire money overseas to help with work-related charity efforts. Some women were also conned into providing personal identification and financial details to the suspects and were debited “substantial amounts of money from their personal accounts.” (more…)

For some time now I’ve been writing about the importance of businesses working together to combat cyber crime. Echoing this sentiment is retired Air Force General Dale Meyerrose, who sat down this week with The New New Internet to discuss the importance of building partnerships, the challenges of building those alliances, and the question of who is ultimately responsible for protecting critical infrastructures in cyberspace.

In the article, “Cybersecurity Partnerships are Absolutely Critical, says Gen. Dale Meyerrose,” Meyerrose, now the VP for Cyberspace Solutions at Harris Corporation, expressed his concerns surrounding cybersecurity and the economic impact of cyber crime:

“The [issue] of most concern to me is cyber crime… elements of cyber crime, particularly economically for our country, have come to the point where we need to really be concerned. There have been estimates that we’ve lost over a trillion dollars a year to cyber crime in the last couple years. And it now exceeds all other crime in terms of the amount of money.” (more…)

The security strategy of “defense-in-depth” allows a system or an organization to prevent an attack by coordinating complementary defense techniques, taking advantage of the strengths of each one while relying on the combination to shore up weaknesses in the others.  The end result is a more complex and nuanced system that is resilient to a much greater number of attacks.

In a similar vein, we can see that any single device recognition strategy on the Web is going to run into some serious limitations, mostly related to the quality and the variety of the data that can be collected from a browser.  There are a number of sources of data that we can use to construct a view of a device on the Web, but most of them can be manipulated, and all of them have problems with uniqueness.  How to build a system that is resilient to so much data uncertainty?  Yeah, I know you’re already a step ahead of me – we design in depth. (more…)

Identity fraud, and the number of its victims, continues to rise each year.

According to a recent article,  “Number of identity fraud victims jumps,” a Javelin Strategy & Research survey found that the total number of ID fraud victims in the U.S. rose to last years to 11.1 million—a 12% increase over the year before. The study also found that 2009 losses due to ID fraud totaled  $54 billion (in comparison  $48 billion in 2008).

But why, with so many anti-fraud management solutions and techniques available, does ID fraud continue to climb year-over-year? According to James Van Dyke, president and founder of Javelin, the continual evolution of technology is one of three main factors contributing to the increase of Identity fraud. Van Dyke sees online crime continuing to escalate, due to: (more…)

It’s been said that the best offense is a good defense. But how do you defend against something that’s always changing? That’s an important question for IT security professionals who know that it’s only a matter of time before cyber criminals find ways to take advantage of the inherent weaknesses in even the best technologies.

The harsh reality is that today’s cyber criminals are so tech savvy and innovative that staying one step ahead of them isn’t always possible. That’s why, when it comes to network security, a good defense should be made up of several different layers. That way, even if a hacker is able to exploit vulnerability in one layer of the system, he may be stopped or slowed down by another. This strategy, known as defense in depth, essentially allows organizations to protect the integrity of their systems by slowing hackers down and buying security professionals the time they need to respond to a security breach once it has occurred. This mitigates the damage that malicious hackers can do, even if they are able to make it past initial barriers. (more…)