The San Rafael, Calif., mobile banking vendor ClairMail Inc. has begun offering an alerting service that it says will allow banks and consumers to respond more quickly to fraudulent transactions.
The service, announced Thursday, works with financial institutions' existing fraud detection systems and processes to help mitigate card, direct deposit and online banking fraud by alerting consumers to suspicious activity via text message or e-mail alerts to their mobile phones, Carl Tsukahara, ClairMail's chief marketing officer, said in an interview.
It also allows 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 said.
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 said.
The alerts also notify consumers if the bank has detected suspicious activity and asks them to respond if they did not authorize it. "The real-time function enables both the consumer and the financial institution to start to mitigate fraud right away," he said. Each bank would set its own pricing, although many may view it as an enhancement and bundle it with a debit or credit card package, Tsukahara said.
ClairMail deployed an early version of the fraud management service with a large, undisclosed U.S. 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 Aite Group LLC of Boston, said.
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 said.
Moreover, for consumers, "unwinding fraud in your account is time consuming and can be a painful process," she said. "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 said.
