Biometrics needed to win the war against financial fraud
This is a guest post by Michael Boukadakis, the founder and CEO of Enacomm
This year, October brings something scarier for ill-prepared merchants than anything Halloween has to offer: the EuroPay, MasterCard, and Visa (EMV) payments liability shift. As of October 1, 2015, all retailers across America will be forced to take the financial fall when card criminals successfully launch attacks that could have been thwarted.
Doing its part in the fight against fraud, the financial industry is making a massive investment to move to more secure payment cards nationwide. A chip card costs 5 to 10 times more than a traditional 25-cent magnetic stripe card, according to ROAM (now Ingenico Mobile Solutions), and about 600 million Americans will receive an EMV chip credit card by the end of 2015, estimates the Smart Card Alliance. All retailers—from pop-up shops to major department stores—will need to upgrade to payment terminals that can verify the validity of more technologically advanced chip credit cards. If the magstripe on the back of a chip-enabled payment card is swiped instead of the chip being dipped, the retailer will bear the burden of any fraudulent transactions.
Making payment cards much harder to clone is a powerful, strategic move; however, it’s important to note that the initiative represents just one battle in the war against financial fraud. Counterfeit credit cards only account for about 37 percent of credit card fraud, and card fraud itself is just a sliver of the larger financial fraud pie. Chip credit cards can still be stolen, and card not present transactions are rife with vulnerabilities. And beyond the card front, fraudsters breach online bank accounts and devilishly divert high-risk transactions. While chip technology will help foil the false reproduction of credit, debit and prepaid cards using stolen information, biometrics must be added to the financial industry’s arsenal to win the war.
The Federal Financial Institutions Examination Council (FFIEC) urges banks and credit unions to ditch archaic, static methods of customer authentication and instead opt for multi-layered, multi-factor dynamic forms. The passwords, PINs and unchanging security questions that have been long relied upon are easily penetrated by sophisticated white collar criminals. Voice biometric authentication, however, is a proven method of identification that is well-suited for multi-layered authentication systems. Used by government intelligence agencies around the globe, voice biometrics technology is even more reliable than fingerprinting. By conducting sophisticated analysis of hundreds of voice characteristics, a bank, credit union or prepaid company can accurately identify and authenticate a customer in real-time.
While PINs and other authentication data are codes that can be cracked, a person’s voice cannot be compromised or stolen. Tech-savvy crooks cannot reverse engineer a voiceprint to create a spoken voice, and even voice “replays” are of no concern, because next-generation technology can ask for words, numbers and phrases in random order. Stolen voiceprints and voice recordings are useless.
Whether faced with brute force attacks, credential sharing, hacking, Phishing, Vhishing, credential resets, Internet searches or social engineering, voice biometrics offers a stronger defense than traditional methods of identity verification—and, unlike a chip credit card, there’s nothing for the customer to lose. How strong? Voice authentication promises a 99.99 percent success rate.
Arming a financial institution with voice authentication technology to combat fraud, identity theft and security breaches is simple. No core integration and no IT staff is required, and the technology can easily be added to new or existing IVR, mobile application and call center systems, instantly providing multiple authentication channels. Customers’ identities can be verified using inbound or outbound calling, texts or a mobile Internet browser. It’s a customer-friendly authentication process that is unfriendly to fraudsters.
Annual fraud costs reached $32 billion in 2014 – a 38 percent jump from 2013 – according to a LexisNexis study, so the nationwide shift to EMV should be welcomed with open arms. Nevertheless, the war is far from over with attacks in the mobile and online spaces becoming more intense. Chip technology will help claim victory in the battle against counterfeit credit cards, but banks, credit unions and prepaid companies should set their sights on voice biometrics as the next line of defense against financial fraud.
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