Discover's Anti-Fraud Tech Delves Deeper into Mobile

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Several issuers use card controls to soothe consumer fears, and Discover is building on this foundation to engage consumers at the network level and encourage more frequent and sophisticated use of mobile devices.

Other implementations of this technology vary by issuer – a small Visa issuer may offer the capability, but a megabank may not, and different banks may have different rules governing when and how the feature can be used.  What's different in Discover's implementation is the feature applies uniformly to all of the network's consumer cards, whether offered by Discover directly or any of the over 30 financial institutions that also issue its cards.

Card controls, which allow consumers to deactivate and reactivate their personal cards, as well as set spending restrictions, are an old technology that's getting a new life as mobile commerce spreads and data breaches make more headlines.

Many issuers describe card controls as an "on/off" switch for cards, suggesting that consumers would want to proactively activate and deactivate their cards for each purchase. Discover's branding of this feature, "Freeze It," describes it as a pause button to be used in extreme circumstances; its advertising shows a woman literally freezing time while she backtracks through her evening to find her misplaced card.

This approach makes it clear that the consumer is in control of when and how to use the feature, rather than being burdened with another responsibility for protecting their own accounts.

"There is no one better equipped to defeat fraud than the consumer. So this feature combined with transaction alerts allows Discover to nip the fraudulent activity in the bud," said Richard Crone, a payments consultant.

Since the Freeze It feature is also tied to a mobile app, it makes it likely that more consumers will download the app, even if they don't yet care to use the app's other features, Crone said. "It's positioning for mobile payments if you can get consumers to use the app more often."

Discover's free Freeze It feature can also be used by phone or PC. A frozen card will still permit some account activity, such as recurring bills, returns and reward redemption. 

"Security is a fine place to innovate and be proactive," said Julie Loeger, senior vice president of marketing for Discover. "What we have been working with for about a year is the concept of having control over your account … that's accessed primarily through the mobile app."

Freezing online and offline purchases while allowing recurring payments is a "natural" separation of how consumers would expect the feature to work, Loeger said.

The feature also engages consumers at a more advanced level than traditional account alerts, Crone said. In this case, consumers are playing a direct role in spotting and halting fraudulent transactions.

"It's the customer as 'chief security officer,'" Crone said. "The zero liability doesn't change, but if consumers detect fraudulent activity, they can take action."

Since consumers know that crooks are discovering new ways to use stolen cards, they would likely welcome a way to shut off their cards in the name of safety.

Discover's feature is open to consumer cards, but not business cards. Since Discover serves primarily consumers, Freeze It's availability covers about 99% of Discover users, Loeger said, adding the company would consider adding the feature to business products if the need arose.

Freeze It joins other security initiatives at Discover, such as biometric authentication.  Discover's technology strategy is also focused on advancing and diversifying the use of mobile. The network's research has shown consumers are interested in engaging the company through digital channels, Loeger said. 

There are some challenges, Crone said, adding Freeze It's stated ability to keep some recurring bills active while the card is frozen could be troublesome to manage.

"Discover doesn't want to shut off those recurring bills, but these bills are initiated by the billers," Crone said.

It's also possible the consumer may not want the recurring bill to continue—setting up another customer service headache, Crone said. "What if I don't want the cable bill to continue automatically? What if I have some dispute with them, such as I feel I'm being overcharged?"

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Analytics Cards Technology Mobile payments