In cyberspace it can be hard to tell who is telling the truth, but at least knowing an Internet user's location can help head off fraud.
EverBank Financial Corp. said Monday that it is implementing an online service that will let it get a general idea of where, for example, an account applicant is located. Though a handful of banks are using this type of technology, few have spoken publicly about the value of knowing where their customers are.
A variety of personal electronic devices now use global positioning systems and radio frequency identification technologies that can disclose a user's whereabouts - often to within a few yards - in real time. This information can be a boon to emergency services personnel and mass marketers, but it has also raised red flags with privacy advocates.
Frank Trotter, the president of EverBank's branchless division, said the Jacksonville, Fla., company plans to have the GeoPoint service, from Quova Inc. of Mountain View, Calif., installed this year. He said it can help spot discrepancies, such as someone who claims to have a California address but is using a computer in Eastern Europe.
"What we're really looking for is mismatches. It's an additional data point that we use," to make a judgment, Mr. Trotter said.
However, the vendor itself says the IP address gives a less precise picture of a user's location than a telephone number.
GeoPoint deciphers a computer's Internet protocol addresses, a unique string of numbers assigned to every computer connected to the Internet. EverBank can then compare that information to the mailing address provided by users and flag any inconsistencies.
Marie Alexander, Quova's president and chief executive, said that just as a phone number's area code and prefix could be used to determine a caller's location, an IP address can offer some general details about the location of a specific computer.
But this application is far less precise that GPS or radio frequency technology. Ms. Alexander said that using an IP address to pinpoint a location "is not as specific as an area code."
And there are some significant limitations. For example, dial-up Internet users will often appear to be using IP addresses assigned to their Internet service providers, whose systems may not even be in the same city as the user. That's why America Online Inc. users from all over the country might appear to be connecting from its Dulles, Va., headquarters.
But Ms. Alexander said she is not worried about pinpointing the location of an AOL user. "I don't suspect a lot of the fraud is coming from AOL users," she said.
Instead, many identity theft cases, especially those involving phishing, have been linked to organized crime groups in Eastern Europe. As a result, analysts say that even knowing the country where a computer is being used can help detect criminals.
Ariana-Michele Moore, an analyst at Celent Communications LLC in Boston, said branchless banks like EverBank need to be particularly concerned about fraud, since criminals prefer the "faceless" Internet channel. "If an applicant is registering in Massachusetts, it's helpful to know that their IP address is based in Massachusetts."
However, some observers said EverBank might want to be more discreet about disclosing its security policies.
George Tubin, a senior analyst at TowerGroup Inc., the Needham, Mass., research unit of MasterCard International, said that revealing the use of location technology could be a deterrent to some less sophisticated criminals. However, "someone who knows how to get around it will say, 'Thank you for telling me.' "
According to Mr. Tubin, EverBank is the only bank he knows that openly admits to using online location software, though others are quietly using the same technology. Quova said fewer than 10 of its customers are banks.
Avivah Litan, a vice president and research director at the Stamford, Conn., market research company Gartner Inc., said people can easily mask their computer's location by hacking into another computer and using remote-control technology to connect to the Internet through that computer.
She also noted that new telephone technologies - notably voice over Internet protocol, which breaks phone traffic into packets and routes calls across the Internet - can let users choose an area code different from the one where they live. As a result, phone numbers are becoming increasingly unreliable for determining a user's location.
Ms. Litan said banks should try to pair a service like Quova's with other tools, such as technology that lets the bank check the clock on a user's computer and compare it to the hour in the user's time zone. "This is one of many factors you need to check," she said.
Ms. Alexander said that Quova had cautioned EverBank "about putting too much" information in the announcement that could be used by criminals.
Mr. Trotter said he hoped that disclosing part of the bank's security strategy could help reassure customers, without revealing too much to con artists. As a general policy, the bank will not list "all of our fraud prevention techniques, for obvious reasons," he said.
