Privacy, Anonymity, Fraud and Gift Cards

Two trends are on a collision course: an increase in online fraud and consumers demanding personal privacy.

On one side, “consumers want their personal data and privacy protected and have grown wary of industry efforts to capitalize on their data” according to Jessica Hawthorne-Castro CEO for Hawthorne Marketing and Advertising. On the other side, online fraud attempts increased 22% during the 2017 Holiday season according to ACI Worldwide.

Criminals purchasing online gift cards to monetize stolen credit cards represent the battle line between fraud and privacy. Criminals misrepresent themselves and count on privacy to gain anonymity which provides cover to commit fraud. An Orwellian lack of privacy removes all anonymity making it impossible to avoid responsibility for criminal activity.

From a practical perspective, to fight online fraud, e-commerce companies need to be sure customers are who they say they are. This can be accomplished looking for inconsistencies in online orders. For example, a reverse lookup of an email address or billing phone number can result in a name that can be compared with a name associated with an order. Mismatches increase the probability that a transaction is fraudulent, and orders with a high probability can be held for review.

Reverse lookups are helpful fraud prevention tools, but they do represent a compromise in privacy. For a lookup to work, the consumer must have permitted some company to database their personal information. If the company holding that information sells its data to advertisers, the consumer will end up receiving unwanted email which at a minimum is annoying and can lead to phishing campaigns in the worst case.

Removing anonymity while protecting personal data is the solution to the conflict between online fraud and privacy. For that to be fully achieved consumers will have to trust holders of of personal data to be used for identity authentication and not abused. Today, the holders appear to be government organizations, credit card companies, phone service providers, ISPs, email providers and a few aggregators using these underlying sources. To improve online commerce while eliminating fraud, a knee jerk response may be to enact legislation that insured that these entities protect consumer privacy while allowing their data to be safely used for verification. Since this problem is global, local or national legislation may not work. Another approach would be to develop a hierarchy of trust similar to the infrastructure provided by SSL certificates. To improve upon that concept, since trust increases with the number of sources verifying identity, rather than a hierarchy of trust, there will need to be a “network” of trust. Either way, this is a problem worth solving.

About GiftRocker

GiftRocker provides gifting and marketing tools to extraordinary shopkeepers. With the GiftRocker service, restaurants and businesses can sell gift cards, events, experiences or just about anything from their website, on Facebook or from their iPhone.

About GiftRocker and Fraud Protection

GiftRocker evaluates over 70 attributes in a gift card purchase which results in a score representing the probability that the transaction is fraudulent. Transactions with a high probability of fraud are held and at times, canceled.

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