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Common Sense Prevails in Washington as “Do Not Track” Legislation Makes Room for Fraud Detection

posted on: Fri Apr 22 2011

Late last year legislation was proposed to the US Congress and in the California Legislature that could open the floodgates for criminals everywhere and greatly diminish the fraud fighting efforts of online merchants.

If you haven’t heard about it, I’m referring to two pieces of legislation, “Do Not Track Me Online Act of 2011 (H.R. 654),” introduced by U.S. Representative Jackie Speier and SB 761, introduced by California State Senator Alan Lowenthal under California’s Computer Spyware Act.

They sound a lot like the familiar “Do Not Call” legislation passed several years ago, minimizing the annoying telephone solicitors that seemed to interrupt dinner each night. While Do Not Track proposals may be well intentioned, they could have ramifications that far outweigh any benefit gained.

Essentially, the proposed bills would allow consumers to opt out and be placed on a national or statewide “Do Not Track” list, making any violation by merchants, businesses or other entities a criminal offense. Sounds really good, right? Who wants to be tracked? Too “big brother” isn’t it?

Unfortunately, if consumers can turn off tracking, so can fraudsters.

Fraud costs companies billions of dollars each year, and those costs are rising at an alarming 22% annual rate. When fraudsters use stolen credit cards and other credentials to make purchases online, merchants absorb the costs. They suffer losses through unrecoverable product, chargeback fees assessed by banks, ancillary costs such as shipping, operational costs, as well as the loss of confidence with individual customers and the overall brand.

From a consumer’s perspective, fraud prevention protects the public by making it more challenging for fraudsters to use stolen credit information. This helps keep prices lower and protects consumers from the costly and time-consuming damage of identity theft.

Device identification is one of the most powerful tools we have in the fight against fraud. It’s part of the Kount Platform and works to alert merchants to the possibility of fraud. Take it away and fraud rates would undoubtedly rise.

It seems as though we may have dodged a bullet in Washington. Wording changes on H.R.654 make room for fraud detection, although the legislation is still under development. California, however, has not modified their version of the bill. Imagine the chaos if SB 761 were to pass in California the way it is currently proposed. Fraudsters would have a new home.

We’ll be tracking them to see if they allow us to keep tracking the bad guys online.

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