Tuesday, March 16, 2010

Device Fingerprinting to Fight Real-time Transaction Fraud

On Tuesday ThreatMetrix unveiled its new cloud-based transactional fraud network. Using its global database of device fingerprints—unique details about the PC, mobile phone or other Internet connecting device–the company says it can detect fraudulent transactions without the need for acquiring personally identifiable information. By correlating incoming TCP/IP information with its database, for example, the company was recently able to identify and stop one malware-infected computer from making an online transaction.

ThreatMetrix, a Los Altos, California-based company, has been working on its fraud network for four or five years, says Alisdair Faulkner, chief product officer at the company. What’s different from other transaction-based fraud networks is that ThreatMetrix uses device fingerprinting not necessarily transaction details for its fraud detection, providing a new set of tools for organizations to verify new accounts, authorize payments and transactions, and authorize user logins. Faulkner describes the new network as “fraud middleware” in that it is designed to complement and integrate with existing fraud solutions.

It is very different solution from the approach taken by other transactional fraud networks such as ID Analytics, a San Diego, California-based company that uses data mining of consumer purchases to address identity fraud. By collecting transaction data, ID Analytics says it can profile a customer’s typical purchasing behavior and flag an abnormal transaction as a possible fraudulent transaction. Unlike the credit bureaus which look at static elements of a person’s profile (SSNs or open accounts) transactional fraud networks look at the live transaction data instead.

What ThreatMetix brings to the table is a proprietary device fingerprinting methodology that is able to probe beyond mere cookies and browser data to identify the machine being used for online access.

Clearly there is a need for such alternative analysis. Cybercrminals have shown increasing technical sophistication year after year. Being able to mask one’s hardware identity seems mere child-splay today–unless one has the sophisticated tools to analyze the output from a compromised machine.

By cataloging devices internationally, ThreatMetrix says it can see through a typical TCP/IP proxy and learn that a machine pretending to be a Windows XP machine located within the United States is in reality a Linux machine located in Vietnam. This could be a machine set to emulate a legitimate user. Or it could indicate a possible man-in-the-middle attack as well, where a third party is eavesdropping on a user’s online session.

ThreatMetrix has also seen one device log into multiple financial services accounts within seconds of each other as well as numerous devices attempting to log into the same online account. This could indicate the use of a botnet, a rogue network of compromised PCs.

Despite the new avenues for fraud taken by cybercriminals today it’s nice to the see the security industry thinking outside the box and offering innovative solutions.

Orginally published in Forbes.com