How Digital Fingerprinting Helps in Fraud Detection and Prevention

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How Digital Fingerprinting Helps in Fraud Detection and Prevention

A digital fingerprint is not a single point of data but a broad collection of information variables generated by your devices as you interact with the Internet. Ironically, our fight for online privacy arms fingerprinters with the sensitive data they seek.

Fraud is pervasive and expensive for financial institutions, making fraud detection and prevention an urgent priority. One of the most impactful tools for preventing fraud is device fingerprinting.

Key Points Covered in The Article

  1. A digital fingerprint is a collection of information variables your devices generate as you interact with the Internet. It is not a single data point.
  2. Device fingerprinting is a powerful tool for preventing fraud, particularly in the financial sector.
  3. Digital fingerprinting uses a combination of data points to identify users and track their activity, such as browser and screen size.
  4. Fingerprinting helps detect patterns and identify potentially fraudulent users or devices.
  5. Fingerprinting can be used to trace an individual’s web activity even if they switch browsers, clear cookies, or use adblockers.
  6. While fingerprinting is valuable, it is not foolproof, and fraudsters can find ways to subvert the system.
  7. Digital fingerprints are unique profiles created by collecting information from various devices used to browse sites.
  8. Fingerprinting can be used to identify and block devices associated with known fraudsters.
  9. Fingerprinting can aid law enforcement in bringing criminals to justice.
  10. Fingerprinting relies on information about a device’s software configuration, which hackers can exploit to impersonate victims.
  11. Privacy-focused browsers like Tor or NoScript can help avoid fingerprinting by masking digital identities.
  12. Fingerprinting is important for fraud detection and can help alert users of suspicious activity or require additional verification.
  13. Fingerprinting can reveal inconsistencies within a user’s profile, helping catch fraudsters using fake device or browser settings.
  14. Fraudsters constantly find ways to circumvent fingerprinting and other tracking methods, requiring businesses to adopt additional device identification methods.
  15. Fingerprinting is part of a holistic security approach for fighting fraud without compromising the experience for genuine users.

Accurate Identification

Digital fingerprinting uses a complex combination of data points to identify users and track their activity.

This is a necessary step in combating fraud, and it must be used in tandem with other tools like biometric identity verification to ensure that companies are protecting their customers.

For example, fingerprinting identifies the user’s software and hardware configuration, such as their browser and screen size, as they connect to sites and apps.

By analyzing this information, the system can detect patterns that indicate whether a user is likely to be fraudulent.

It can also highlight devices connecting from locations with high levels of fraud, such as libraries or universities where people are known to use multiple devices to log in and access services.

As we use our phones and web browsers more personalized than ever, these unique data points leave behind a trail of identification that fingerprinters can analyze to find common elements.

Like detectives piecing together clues from a crime scene, fingerprinters can assemble these common elements into a recognizable identifier that allows them to trace an individual’s web activity even if they switch browsers, clear cookies, or use adblockers.

It’s important to note that fingerprinting is not foolproof, and there are ways that fraudsters can subvert the system.

For one, fingerprints change every time a device is updated, and something as simple as installing a new plug-in or clearing cookies can cause the system to break down and fail.

Reliability

Digital fingerprints aren’t just some number; they are a unique profile that includes various information variables collected by devices — smartphones and tablets, desktops, laptops, and even smart TVs and appliances — as users browse sites.

This data is used to create a profile of the device in use, which is then compared against a database of fingerprints associated with known fraudsters and other bad actors.

Hashes are then generated that can be used to identify and block the device in question, which is useful for combating friendly fraud (i.e., illegitimate chargebacks).

While this is a valuable tool for helping companies prevent and mitigate transaction fraud, it also provides law enforcement with the information they need to bring criminals to justice. 

Unfortunately, there’s no practical way to engage with the modern Internet and not leave a fingerprint behind.

Our browsers are more personalized than ever, and, ironically, even adblockers and ‘do not track’ settings provide fingerprinters with a wealth of cross-examinable information.

Companies must ensure that their fingerprinting solutions are robust and sophisticated.

Security

Digital fingerprinting uses information about a device’s software configuration, such as screen size and dimensions, operating system, installed plug-ins, and other software, to create a profile of that particular device.

This allows a website to identify and track that particular device over time. It provides reliable identification that can even recognize returning fraudsters, assuming they don’t install/uninstall various plug-ins or change browsers.

The same strength of fingerprinting that makes it a reliable anti-fraud tool can be used by hackers to impersonate victims, especially if they can get their hands on the data.

For instance, a criminal with access to a victim’s device can use that fingerprint – combined with the victim’s saved logins, autofill form data, and other personal info – to waltz into an account on e-commerce sites or other services, make purchases, transfer funds and to exploit those accounts for all they’re worth.

The irony is that the fight for online privacy can make it easier for criminals to weaponize our data against us.

Our use of adblockers, ‘do not track’ settings, and incognito mode add more variables to the fingerprint pool that tracking services can use to identify devices.

The best way to avoid fingerprinting is to use a privacy-focused browser, such as Tor or NoScript, which effectively masks your digital identity and confuses website scripts that use it to identify users.

Privacy

While the allusion to something cops and investigators use on TV shows may sound creepy, fingerprinting is a powerful tool that helps fight fraud.

When combined with other data points, fingerprinting identifies you as the same user even when you change IP addresses, clear cookies, or use private or incognito browsing modes.

This is important for fraud detection because it allows sites to alert users of suspicious activity or require additional verification like two-factor authentication (TFA) code when logging in from an unfamiliar device.

Fingerprinting also reveals inconsistencies within a user’s profile – like if they are using a proxy or VPN to hide their identity, for example.

This can help catch fraudsters who try to game the system by faking their device or browser settings to access an account and make fraudulent purchases.

However, fraudsters continue to find ways to get around the effectiveness of cookie-based tracking and fingerprinting. That’s why businesses need to find other methods of device identification that do not compromise their customers’ privacy.

Despite the ongoing challenges, fingerprinting remains an impactful method for fighting fraud without damaging the experience for genuine users.

It is part of a holistic security approach that Plaid provides to world-class companies and their customers.

Plaid’s device identification platform, Spec, is integrated with fingerprinting to help build best-in-class user experiences and fraud prevention.

Conclusion

In summary, digital fingerprinting collects data points to identify and track users’ online activity. It is effective in preventing fraud and enhancing security. However, it can also be exploited by hackers. While privacy measures can complicate fingerprinting, privacy-focused browsers can help mitigate it. Businesses should continuously explore alternative methods to protect customer privacy. Fingerprinting remains a powerful tool in fighting fraud while ensuring a positive user experience.

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