Mobile phone numbers and e-mail addresses are increasingly vital to verifying a consumer's identity to protect against fraud.
The past foundation for a person's identity Social Security number, name, address, phone number and date of birth has evolved to include computer Internet Protocol addresses and, more recently, e-mail addresses and mobile phone numbers, says ID Analytics Inc., a San Diego, Calif.-based consumer risk assessment company.
"We have expanded the definition of identity," says Ken Meiser, director of compliance and authentication solutions for ID Analytics. An identity now comprises "a collection of identifiers and the context in which they are asserted and the relationships they form," he says.
At one time, mobile phone numbers were fairly "transitory" because people tended to change them when switching phones or moving to a different state, Meiser says. "Now, the mobile phone has become a semi-permanent factor to identify people," he says.
ID Analytics is seeing a mobile phone number on 60 to 75 percent of the applications processed by its banking, telecommunications or money-lending clients, Meiser says.
Companies such as ValidSoft Ltd. also links mobile phone and payment card details so banks can determine if the user's phone and card are in the same place at the same time a transaction is initiated.
Though such services tend to require the user to opt in, Meiser says the phone-card location matchup can be a powerful fraud prevention tool.
ID Analytics is able to "attach bad events to an identifier" through the 3.3 million client-reported fraud incidents it has compiled in the past eight years, Meiser says. "It helps the data self-correct in knowing that a certain address or phone number has been associated with previous fraud incidents," he adds.
Essentially, by adding more identifiers and coordinating how they match to create an overall picture of the person's identity and intentions, ID Analytics enables its clients to "know more than they know now," Meiser says. But there's no such thing as an "absolute magic bullet," he says.
The work of ID Analytics fits in with what more banks and merchants are attempting to do in making connections between data points, says Julie Conroy, senior analyst and fraud expert with Boston-based Aite Group.
"They want to leverage those data elements to determine good or bad transactions," Conroy says. "Some factors [like an address] are shared by too many people to be considered something legit."
The financial and payments industries are seeing more opportunities develop to feed data elements into establishing consumer identities, Conroy adds.
"The more data you can bake into the decisioning solution, the better, as long as you don't inundate yourself with false positives," Conroy says. However, the expanded use of data in "an intelligent fashion" can also reduce false positives, she adds.
Because of ongoing data compromises, it is becoming increasingly important for security vendors to add personal identifiers to piece together a clearer picture of a consumer, says Avivah Litan, a vice president and security expert at Gartner.
"It is difficult for a merchant or bank to do it on their own, so it is a good thing that companies like ID Analytics can do it," Litan says.
The financial and payments markets "really need" the expanded consumer scrutiny, so ID Analytics and other companies like it are addressing "the demand out there for this kind of protection," Litan adds.
Over time, behavioral biometrics will come into play as well, Litan says. "It's a pretty cool technique to be able to tell how someone tends to use a device, how they type on it, and being able to tell if a person or machine is doing it," she adds.
Currently e-mail addresses are becoming a highly predictive factor for flagging potential fraud, Meiser says.
"The older the applicant is for a Gmail address, the more likely it is to be fraudulent," Meiser says. "By the same token, a 26-year-old applying for an AOL account is a potential problem."
In the near future, social network log-ins will become key identifiers as well because hackers seek entry into those networks to obtain other vital information, he adds.
In August, ID Analytics expanded its cross-industry identity network to include more identifiers.
Adding new layers of consumer identifiers helps strengthen fraud defenses, but the financial and payments industries lack a common standard, says Ed Falco, a customer-service fraud and compliance expert for New York-based Auriemma Consulting.
"There is no consistent method in place for the levels of protection and authentication needed," he says.