Identity Data Takes on Commercial Use Cases Beyond Fighting Fraud

As fraud prevention experts work to thwart shadowy foes, the identity data that is central to detecting and stopping theft has other uses that are emerging alongside new fraud-fighting tools.

Speaking with PYMNTS for our “Executive Insights Series – The Next Three Years,” Jared Kernodle, chief revenue officer at Kount, an Equifax company, said he sees identity data not just as a means to prevent fraud, but as a way for merchants and brands to tailor offerings as they shield consumers from omnipresent scams.

Comparing the data evolution happening in commerce to what’s becoming possible with identity data, Kernodle sees the next three years in his space being about “pre-authorization, helping payment environments, helping commerce, helping people understand, ‘This is Jared, not only is Jared a good or a bad customer but what are Jared’s intentions? What is Jared’s propensity to buy? What’s his income level? Health? Wealth? Where’s he buying today?’”

Moving these elements of identity fraud prevention upstream into the wider financial ecosystem will let them flow from the merchant, who gets automatic alerts, to issuers in order to power more informed decisions with customers and reduce false positives. Acquirers can also share the benefits.

“These technologies are going to be less and less bifurcated, and they’re all going to talk,” he said. In this way, identity can protect against fraud while simultaneously enabling more sales.

He sees “multiple use cases, not just in traditional retail and restaurant,” but in driving better experience in healthcare, insurance, automotive and everywhere commerce now happens.

See also: A Case for Hyper-Focus on Hyper-Personalization in Q4

Dawn of the Fraud Data Consortium?

Looking where new forms of fraud are already on the rise — like automotive eCommerce and skip tracing fraud, for example — the identity sector has a heavy lift, but there are upsides.

On his three-year timeline, “It’s the different data points that you can collect and leverage for the benefit of your business,” Kernodle said. “For the solution providers in the space, if you’re only doing fraud three years from now, it’s like, well, duh, I stopped the bad actors, but how can I help you get better customers and do better with your customers? That’s the evolution.”

A good example of the new complexities of identity data is around the connected car and how these rolling 3-ton wallets can be exploited unless properly protected.

“If you get into a rental car today, you log in and screen up the car and you see 12 different phones and contacts synced,” he said. “There has to be a way to remove that data from that environment and protect the consumer’s identity.”

Identity security solutions like Kount can actively track when cards are being used suspiciously, and Kernodle said he would like to see more cooperation in the space akin to banking to prevent more ID abuse.

He described a collaboration “similar to the banking sector. They have consortium data. They have known fraudsters that live in that environment and all the providers share with one another who those fraudsters are. We’re going to start seeing that in the payments world.”

Read: Merging Physical Data With Digital Identity Offers More Realistic View of Consumers, Businesses

Identity Evolves

Talk turned to the metaverse and other emerging fraud opportunities in entire virtual worlds inhabited by avatars that may or may not be sophisticated fraudsters in cute digital costumes.

“Tomorrow’s targets are going to be not just [people’s] emails,” he said, but new forms that come along with these immersive experiences. “Payments fraud is where you have to move upstream,” he said, because loyalty fraud, gift card fraud, and the like go where the money is, including the metaverse (someday), but today, it’s gaming and eCommerce, broadly speaking.

As we move from email sign-ins to biometrics and device-level tracking where a thumbprint unlocks the payment, those networks will increasingly share data to stop the fraudsters as soon as they attack, and before any personally identifiable information (PII) is compromised.

“Identity is going to evolve outside of what we know it as today: name, social, physical address, business address, email. You’re going to create a digital thumbprint in some capacity, and that’s what people are going to start identifying you as,” Kernodle said.

Using identity security data in novel ways not only frustrates fraudsters but can fuel the growing “buy button” movement across verticals, including things like mortgages and insurance.

“All of those things can stimulate and grow commerce in multiple verticals,” he said. “I can authenticate you without you having to enter a password anymore because I understand your behavior on your device to help drive that better experience and keep the fraud out.”