Financial institutions and consumers will be able to more quickly detect and respond to fraudulent transactions and suspicious bank-account activity using a mobile-based fraud-management service ClairMail Inc. has developed, the San Rafael, Calif.-based company announced Feb. 17.
The service works with financial institutions’ existing fraud-detection systems and processes to help mitigate card, direct-deposit and online-banking fraud by alerting consumers of suspicious activity via text-message or e-mail alerts to their mobile phones, Carl Tsukahara, ClairMail chief marketing officer, tells PaymentsSource. It also enables financial institutions to cut their servicing and risk-management costs by reducing false positives and minimizing the cost and time of actual fraud resolution, he says.
Consumers may sign up to receive immediate text-message or e-mail alerts customized to their specifications so they receive as many or as few alerts as they want, Tsukahara explains.
For example, consumers who rarely shop online may sign up to receive alerts if someone initiates a transaction over a specific amount, Tsukahara says. Consumers also may also opt to receive alerts when their balance dips below a specified amount, he adds.
The alerts notify consumers if the bank has detected suspicious activity and asks them to text back if they did not authorize the transaction. “The real-time function enables both the consumer and the financial institution to start to mitigate fraud right away,” Tsukahara says.
Consumers may enroll for the service at participating financial institutions through their online banking site, an independent website set up by the bank, by phone or in person, Tsukahara notes.
Consumer fees are subject to the bank, although many institutions may view it as an enhancement and bundle it with a debit or credit card package, Tsukahara says.
Financial institutions pay a fee to ClairMail based on the scope of services. Some banks may enable all checking accountholders to use the service, while others may offer it only to specific customers, Tsukahara says, declining to comment on specific fees.
ClairMail deployed an early version of the fraud-management service with a large, undisclosed U.S.-based credit card issuer and plans to sign up more financial institutions in the second quarter.
“Banks are definitely taking advantage of the mobile channel for fraud prevention,” Julie Conroy McNelley, an analyst with Boston-based Aite Group LLC, tells PaymentsSource.
Through mobile alerts sent immediately, consumers may set their preferences. And if they see suspicious account activity or fraudulent transactions, they can take action right away, McNelley says.
Moreover, for consumers, “unwinding fraud in your account is time consuming and can be a painful process,” she says. “With the mobile alerts, there is less exposure, plus it shows consumers that their bank is looking out for their customers’ best interests.”
Many banks may not yet use mobile alerts to identify fraud, but this type of service “is going to catch on like wildfire,” McNelley contends.
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