New cell phone technology prevents credit card fraud

Cell phone technology prevents fraudA new technology introduced by VerifySmart, a payment-processing company, will use cell phones and PDAs to protect consumers from fraudulent credit and debit card charges.

Under the new system, consumers will receive a phone or electronic message alerting them the moment their card is used. Before the charges are processed by the bank, the cardholder must authorize the purchase by entering a PIN number. Once this occurs, the transaction continues as normal. If the consumer does not respond or declines to enter a PIN number, no sale will occur.

As Canadian debit card fraud continues to grow, surpassing $95 million in 2006, creators of this new technology say the protections offered by the traditional PIN identification system aren't enough.

"Once a credit or debit card has been stolen, a seasoned criminal or fraud expert can quite easily breach required securities, assume an identity, and successfully execute several commercial transactions - at the expense of the card holder," according to the VerifySmart press release.

VerifySmart operates under the assumption that it's more difficult for a hacker to obtain repeated access to someone's cell phone than it is for the fraudster to discover a PIN number. According to the company, adding a verification process remote from the physical card will make each transaction more secure because the consumer can prevent charges despite card loss or identity theft.

 

Published September 23, 2009

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