Geography has always been an important element in authenticating physical world transactions. Credit card issuers routinely monitor where a customer's charges are occurring in relation to spending patterns, deactivating cards with transactions that deviate from the geographic norm. Verifia's NetGeo now enables financial institutions to bring these same well-developed practices to the Internet in an effort to thwart online fraud.

Situation Analysis
Fraud within the overall financial industry grew 33% from 1997 to 1999 (American Bankers Association), with the rate of online fraud growing even faster. HNC Software estimates that online transaction fraud rates are three times higher than in the physical world, while a Celent study cites that online merchants experience fraud rates 30 times higher than in the physical world.

In the realm of e-commerce, fraud is a significant problem with online Card Not Present (CNP) transactions. In 1999, e-merchants, according to the Gartner Group, lost an estimated $1.0B, or 5% of all online sales, to credit fraud. By comparison, brick-and-mortar establishments typically suffer losses of only 0.1% of sales. With payment card organizations, banks, and Internet retailers spending millions to encourage consumers to shop online, improved security is vital to the growth of online commerce.

The Solution
Verifia™'s NetGeo SM software enables financial institutions and other organizations conducting commerce on the Internet to combat fraud by adding a geographic component to transactions. Using only a user's Internet Protocol (IP) address, InfoScope can determine the geographic location (country, state, city) of an individual making a CNP transaction online. This information, used in conjunction with other intelligence gathered from other sources regarding the transaction (name, billing address, shipping address, items purchased, etc.), can provide significant clues in the effort to identify fraudulent transactions.

NetGeo can be used in conjunction with following online fraud prevention applications:

• Scoring online CNP transactions
  The geographic location of the user can be a critical element in a rules-based engine that
  relies on available information to detect fraudulent transactions.
• Authenticating online credit approvals
  As with transactions, authentication and approval processes can be rendered significantly more robust with geographic intelligence from InfoScope.
• Verifying identities in peer-to-peer (P2P) payment transactions
  NetGeo works well with both email and online transfers, allowing the growing P2P payment market to take steps to control fraud.

Case Study: HNC Software
HNC Software implemented NetGeo as a critical component of eFalcon¢â, its leading real-time Internet fraud detection service for e-commerce merchants and their service providers. InfoScope augments eFalcon's Internet Protocol Address Identification (IP-ID) system that identifies the purchaser's country of origin on an e-merchant's web site. This information is a crucial element when scoring online CNP transactions in real-time, resulting in a system that enables e-merchants to reduce instances of fraud.