12:36 PM

VeriSign Launches Fraud-Detection Service

Vendor says it will help online merchants spot fraudulent transactions.

VeriSign Inc., a leading Internet infrastructure services and security vendor, is adding Fraud Protection Service to its current online payment services. VeriSign chairman and CEO Stratton Sclavos said Wednesday the company will combine geographical information culled from its domain registry service with other data from its credit-card clearinghouse service to thwart potential online fraudsters.

The service will use credit-card numbers, cardholder names, and the Net addresses of the parties in a transaction to "make inductive decisions about whether that transaction is fraudulent," he says.

Analysts say the new service, which is priced at $19.95 per month and adds an additional nickel to each transaction for the basic service, could take a bite out of the growing and gloomy online fraud statistics if enough merchants sign on for the service.

Avivah Litan, VP and research director at Gartner, says that VeriSign is in a unique position--because of its management of the .com and .net domains--to help small and midsize online merchants spot fraudulent transactions. Online crooks often set up a cell-phone account and a domain-name address when they're planning to commit fraud. "They want a place you can call and E-mail them," she says.

As the battle to fight online fraud heats up, VeriSign's service will be able to spot some fraudulent activity. But the company doesn't have eyes everywhere, Litan says. "Their competitors have strengths VeriSign doesn't currently have," she says. "LightBridge is strong looking at wireless fraud, and the credit bureaus have their own offering for credit-card fraud."

There's a good chance that the 100% annual growth in online fraud can be slowed as more merchants and credit issuers deploy these types of anti-fraud products and services, says Litan. Last month, software startup ID Analytics introduced software that aims to help credit-card issuers spot fraudulent activity at its source, when crooks fill out credit applications.

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