Reed Taussig, ThreatMetrix: "Fraud is coming this Christmas"

The holiday season is just around the corner and with it will arrive the inevitable annual tsunami of online credit card theft, identity theft and attempted bank fraud. It’s a predictable seasonal onslaught which in 2014 will follow what has already been an exceptional year for the cybercriminals.

What is even more unfortunate is the top line impact that cybercriminal activity has had on companies like Target and Home Depot. A rapid increase in the use of two-factor authentication (2FA) and out-of-band authentication has meant the consumer is now guilty until proven innocent. Furthermore, 2FA is expensive and introduces extra steps into the online shopping experience. This in turn increases transaction abandonment rates and can reduce topline revenue.

At ThreatMetrix we will process well over one billion online transactions per month from November. Of these, more than 50 million will be either suspicious – triggering additional costly and inconvenient screening measures – or outright fraudulent.

I would argue that these top line costs to financial institutions and online retailers vastly outweigh the combined value of enterprise security budgets and fraud losses for many companies.

A new way to cut fraud

There is a different and much better alternative to proactive customer authentication which is passive, context-based authentication, based on global shared intelligence. Imagine if you were able to reduce your use of step-up and out-of-band authentication by as much as 70% with no increase in fraud?

This system is completely transparent to the customer, requires less than one second to complete and costs less than a penny per transaction. ThreatMetrix context-based authentication also operates without the need to expose the true identity of your customers – protecting you from potential privacy infringement.
ThreatMetrix passive authentication uses four layers of defense to identify good customers and criminal actors in real-time as follows:

• Device Analytics: We examine the attributes, location and reputation of that customer’s endpoint device to see if it’s infected or is deliberately hiding its true identity.
• Identity Analytics: We inform you about related devices and any user credentials that customer regularly uses.
• Behavioural Analytics: We correlate related events and customer activities across more than 12,000 merchant and financial customer facing websites around the globe, so you can passively and instantly authenticate that person.
• Global Intelligence: We provide you with the tools to analyze transactional results and trends, manage rules and risk levels that are unique to your company’s business and to integrate other third party solutions.

 About the author

Reed Taussig has more than 30 years of experience in the computer hardware and software field. Prior to joining ThreatMetrix, Mr. Taussig was president and CEO of Vormetric, a leader in the data privacy and protection industry. Under Mr. Taussig’s direction, Vormetric established itself as a leading provider of encryption solutions for the Payment Card Industry Data Security Standards (PCI DSS). Mr. Taussig also served as president and CEO of Callidus Software, the leading provider of enterprise incentive compensation management application systems.

 About the company

ThreatMetrix is the fastest-growing provider of integrated cybercrime prevention solutions, processing over 500 million login, payment and wire transfers monthly. ThreatMetrix TrustDefende Cybercrime Protection Platform helps companies prevent unauthorized access to web and mobile applications, protect sensitive data, and secure transactions against account takeover, payment fraud, identity spoofing and malware.