After spending eight years analyzing potential fraud factors of online transactions, Iovation Inc. says it is now ready to immediately tell clients which shoppers they can trust based on the devices they use.

Iovation has launched TrustScore, a cloud-based service for online merchants that gives "credit" scores to devices online shoppers use to initiate transactions, the Portland, Ore.-based online security provider announced this week.

"We have processed more than 9 billion transactions, looking for what is risky, and what these devices have been connected to and what kind of activity they have been involved in," says Andy Mallinger, Iovation's director of product management.

TrustScore uses the data behind Iovation's past research with its ReputationManager 360 fraud prevention service, as well as information from online merchants and banks, to construct a model of "how likely a device is to be good now and can stay that way," Mallinger says.

Essentially, ReputationManager has assessed risk factors, and now TrustScore recognizes good customers early in the online shopping process, Mallinger says.

TrustScore represents a way for Iovation to leverage the data it has compiled in keeping the transaction and activity history of computers, tablets and mobile phones that initiate online transactions, Mallinger adds.

Iovation tested TrustScore for nearly a year and will promote it either as an add-on to its ReputationManager or as a separate service. The cost for TrustScore will depend on various factors about the online business, including transaction volume, Mallinger says.

The online merchant would establish the rules, or triggers, which TrustScore would use to begin its evaluation of device, Mallinger says. "It could start when a shopper first comes onto the site, or it could start when a product has been placed in the shopping cart," he says.

After TrustScore applies a numerical value from 1,000 to 9,999 as the device's "credit score," with a higher score signifying a safer device, the information moves into the merchant's fraud management system. At that point, the business follows its own rules to decide how to proceed with the transaction.

Iovation estimates that online merchants place up to 10% of online transactions under review, with the majority ultimately approved. TrustScore is designed to speed or replace that review process.

Customers vetted by TrustScore "may be new customers to the merchant, but they are not new to Iovation," he adds. "We can tell the merchant we know them, and they are good customers."

A score could be driven down by a history of chargebacks, he says. As with credit scores, a shopper's device would need to have a history of shopping to receive a score.

The payments industry has viewed its progression as "going from online to mobile," making Iovation's service fit right into how the industry is evolving, says Scott Strumello of New York- and London-based Auriemma Consulting Group.

"It's an interesting concept because the basic notion behind establishing a credit score is to use past behavior to predict the likelihood of future behavior," Strumello adds. "The same thinking would apply to fraud attempts."

The idea of establishing scores for the trustworthiness of e-commerce devices "makes sense in this kind of environment," Strumello says.

In January, Iovation added two-factor phone authentication to its fraud screening services, providing online shoppers with a one-time code for access to a website to proceed with a transaction.

Nearly a year ago, Iovation's fraud detection service helped police in Kirkland, Wash., uncover and arrest members of a fraud ring.

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