A New Weapon in Fraud Prevention for Cross-Border Ecommerce

Posted September 27, 2017

A New Weapon in Fraud Prevention for Cross-Border Ecommerce

Can a revolutionary new global digital identifier really be a powerful new weapon in cross-border eCommerce fraud prevention? Can it also open up new revenue streams for businesses operating in digital economy?

The answer is yes.

In a major announcement at last week’s Digital Identity Summit in San Francisco, ThreatMetrix unveiled a technology breakthrough that enables companies to leverage unique, anonymized customer identifiers designed to enable seamless and secure digital business worldwide.

ThreatMetrix ID™ marries data spanning the offline and online worlds to assign a single user identifier to each of 1.4 billion users within the ThreatMetrix Digital Identity Network™. Businesses are provided with a dynamic confidence score on the authenticity of that digital identity during each transaction, whether setting up an account, logging in to an account, making a digital payment or any myriad of online tasks.

Judging from current fraud rates for cross-border commerce, it arrived just in time.

The Cross-Border Fraud-Fest

Companies that conduct business across national borders experience up to 2.5 times higher fraud rates than those who strictly sell domestically. In the U.S. alone, cross-border eCommerce fraud easily tops $32 billion per year.

The problem is that consumer identity data can vary wildly by region, making it difficult to get a firm read on the people businesses are transacting with. Additionally, no international standard exists for what a physical address even means, allowing for wide variances from one country to the next.

What’s more, the closest things to unique identifiers also vary by country—the social security number in the U.S., the National Insurance number in the UK, the Resident Identity Card (RIC) in China and the Unique Identity (UID) number in India. Many countries have no identifier at all.

Unfortunately, these kinds of identity credentials have been rendered irrelevant in our digital age. Cybercriminals can now easily mine the dark web for stolen credentials to hijack bank and retail user accounts and make illegal purchases. At global scale, catching thieves can be an insurmountable task, and international chargeback fees can be exorbitant.

To protect themselves, companies can be overly restrictive in their risk policies. For U.S.-based companies alone, this results in more than $8 billion in annual losses from false positives, according to Business Insider.

ThreatMetrix ID is designed to change all that.

Cracking the Code

The result of more than nine years of development, ThreatMetrix ID solves the complex challenges that digital organizations face when doing business across national borders.

This digital identifier is based on the complex and continually changing relationships that form between transactions and other identity attributes containing one or more of the same pieces of anonymized data from online and offline channels. This includes devices, user names, email addresses, payment card information, IP addresses and more. Over time, these relationships evolve and coalesce to form a clear picture of every transacting user.

This picture can literally be visualized in multiple ways to understand how and when a user transacts, and to better identify anomalous or potentially suspicious behavior on the part of user, or activity that may signal the use of one’s identity by cybercriminals.

By cross-referencing device, location and identity data with crowdsourced, global digital identity intelligence from 40,000 websites and mobile apps, as well as 75 million daily transactions worldwide, ThreatMetrix ID provides a real-time confidence score on the authenticity of the user.

As a result, trusted users are instantly recognized, enabling the fast, friction-free experience today’s want-it-now consumers demand. And fraudsters are blocked, even if they’re using valid user credentials. Plus, it all happens transparently and instantaneously. And step-ups and other challenges can be reserved for times when an extra level of precaution is warranted.

A Whole New World of Opportunity?

With ThreatMetrix ID, companies can dramatically reduce the frequency and cost of cross-border eCommerce fraud, as well as the friction associated with step-ups and false positives. By improving the percentage of trusted transactions, they can also reduce manual reviews and associated operational expenses.

Since these IDs and their associated data are fully anonymized, companies can also protect user privacy and navigate the ever-increasing complexities of country-specific privacy laws and regulations.

Most important of all, instant and accurate recognition enables companies to truly “go global,” expanding into new markets and accepting more cross-border transactions with confidence – even if those transactions are from areas previously considered high risk.

Will ThreatMetrix ID be enough to make the digital economy truly safe to conduct cross-border business? Time will tell. But, as the first universal digital identifier, it could be enough to give companies with global eCommerce ambitions something that’s been in short supply when it comes to cross-border fraud prevention – hope.

To learn more, read our exclusive Solution Brief.

Frank Teruel

Frank Teruel

Chief Financial Officer, ThreatMetrix

close btn