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News

Fraud increase expected relating to Smartphone use

41st Parameter : 20 November, 2009  (Technical Article)
Anti-fraud expert 41st Parameter is alerting Risk Managers to the security implications of a surge in smart phone adoption rates
41st Parameter forecasts increased mobile channel cybercrime and decreased effectiveness of traditional anti-fraud tactics, attributed to the rapid adoption of new mobile handsets and multiple operating systems. According to a November 2009 consumer study of US mobile phone users, 18.9 per cent of mobile consumers now use a smartphone, and an additional 49.2 per cent plan to purchase an advanced mobile device within the next two years. Last week, Gartner reported smartphone sales in Q3 2009 grew 12.8 per cent year over year, reaching 41.1 million units.

'The mobile channel is the fastest growing segment of the Internet today. For companies looking to increase their audience potential, conducting business with billions of mobile handsets is compelling,' said Ori Eisen, founder and chief innovation officer of 41st Parameter. 'Unfortunately, the mobile channel is equally appealing to cybercriminals, as traditional fraud deterrents won't identify or differentiate between the growing varieties of smartphones.'

The use of cookies, cache, Flash Shared Objects and IP Geolocation for detecting and preventing online fraud are increasingly ineffective. These tactics are further degraded on mobile devices, which lack Flash and are channelled through IP blocks by telecommunications carriers, causing actual location to be misrepresented. To effectively identify cybercrime activity, it is critical to understand which devices are transacting online, how frequently they appear and the actual proximity of each as compared to where they ought to originate. 41st Parameter's device intelligence technology differentiates these and many other characteristics for any Internet connected device, including all smartphones, without any personally identifiable information.

While the use of mobile devices for transacting online continues to be an increased potential source of fraud, another tactic exploits the explosion of newly created dedicated mobile sites as a prime target of fraudsters in the near term. A recent whitepaper on the tactics perpetrated against the mobile channel titled 'Mobile Banking - An Easy Target for Fraud' is available by request at http://www.the41.com/land/MobileFraud.asp.

41st Parameter actively contributes as the security and risk advisors to a number of fraud prevention committees including the Financial Services Technology Council (FSTC) Mobile Payments and Banking Project.
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