Credit and debit card fraud can be reduced through the use of SMS alerts, according to mobile messaging service provider Clickatell.

Consumers need to get more involved in managing the threat of identity theft and financial fraud. Mobile Marketer's Chris Harnick interviewed Chuck Drake, executive vice president of marketing at Clickatell, Redwood City, CA.

What challenges does mobile fraud present?
The challenge of credit and debit card fraud is everywhere and is not to be confused as a mobile fraud issue at all. Instead, what we are doing is using SMS or text messaging via mobile to help fight and prevent account transaction fraud. This kind of fraud is an age old problem yet is increasing as attacks get more sophisticated.

We're finding credit and debit card fraud can be greatly reduced through the use of simple SMS alerts sent to the cardholders' mobile phone to engage the consumer more directly in the process of early fraud detection and prevention. Banks and other card issuers must implement SMS alerts for every transaction, allowing consumers to take part in the fight against fraud.

Addressing the problem of credit and debit card fraud via SMS is of benefit to everyone involved in the transaction chain: the consumer, the banks issuing the cards and the merchants.

Banks and card issuers must implement SMS alerts for every transaction, allowing consumers to take part in the fight against fraud. Using SMS in this way is a great example of how the mobile industry can come to the rescue to help solve a significant, persistent problem of great concern to the public at large.

Why should consumers get more control over their transactions? How will this address the challenges of mobile fraud?
The problem of credit and debit card fraud is not going away and recent examples of attacks aimed at 7-Eleven and other popular retail outlets are demonstrating that fraudsters are getting more sophisticated every year in their methods aimed at identity theft assault and financial account compromise. In this particular example, the media has published that about 130 million card accounts were fraudulently obtained from payment processors operating behind the scenes for 7-Eleven and Hannaford Brothers grocery chains.

With credit and debit card fraud happening on such a massive scale the problem is no longer contained to just an occasional breach affecting just a few hundred or thousand or so accounts every once in a while.

Instead, we're talking about major chunks of the U.S. cardholder population who are alarmed by the scale of these attacks that have occurred. Big brands are immediately hurt by the loss in public confidence that occurs when fraud on such a scale occurs and affects their customers.

In response, consumers everywhere are quite alarmed by the current situation. As a cardholder, it used to be a good enough assumption that you could put your trust for fraud protection in the hands of the bank issuing your credit and debit cards. Also, the branded card association names of Visa, MasterCard, Discover, American Express and etcetera that we carry in our wallets have also for years been a 100 percent trusted source of consumer confidence in fraud protection.

While the efforts of the financial organizations aimed at protecting the consumer are still valid and needed; nonetheless, the past approach of relying solely on these organizations to protect the consumer is proving to be a flawed strategy.

This is especially true given the magnitude and scope of the breaches that are occurring and the drop in consumer confidence [with each major breach].

Research from the financial services industry themselves is showing that consumers are increasingly concerned about account fraud and no longer just want to sit on the sidelines with respect to the issue.

People know their financial business better than anyone else.

For the longest time, banks and the credit and debit card industry, in general, have not fully utilized the customer themselves in the process of early detection of fraud and its prevention. Instead, these industries have relied too much on their own internal account monitoring systems that are highly automated and efficient yet are nowhere near as effective as human monitoring of personal financial account activity to detect and prevent fraud.

If the banks and credit and debit card industries themselves put SMS fraud alert systems into place, then customers can keep a close watch on their money -- anytime, anywhere. SMS alerts at the time of each transaction gives people the constant insight and daily transparency they need to make sure their money is safe.

Please illustrate some signs the industry is beginning to organize?
Major U.S. banks are just starting to implement SMS for transaction and fraud alerts. In Africa the bank and card industries are more advanced than in the U.S. in terms of the savvy use of SMS as a vehicle for getting the consumer involved in fighting financial account fraud and identity theft.

In South Africa, there are examples of about 80 percent of a bank's retail customers already being provisioned and receive daily SMS account transaction alerts -- helping them to spot suspicious activity the moment the transaction is being electronically processed.

There are three things that nearly every human being leaves their home with everyday -- their keys, their wallet and their mobile phone.

For many years outside the U.S., the mobile phone is being used as a platform for engaging the consumer in the process of identifying and fighting financial account fraud. This will vastly improve consumer confidence and trust. It is time for the U.S. banking and credit and debit card industry to wake-up and begin adopting mobile best practices proven effective elsewhere in the world.

With the massive level of account fraud that we are seeing, U.S. consumers everywhere are starting to demand better answers. SMS transaction alerts are the method of choice already proven effective at helping consumers participate in the process of fighting debit and credit card fraud.

First National Bank, Standard Bank and Metropolitan Insurance provide SMS-based transaction and fraud alerts in general, under an umbrella of text banking services to their customers for years.

Can you go into detail regarding some of your clients using SMS for fraud prevention?
First National Bank uses Clickatell to offer text banking to customers, SMS fraud alerts is just one of the benefits. At the end of last year, FNB sent more than 60 million SMS messages to its retail banking population enrolled in its service.

When the service was initially rolled-out it was adopted very quickly by consumers. Just six months after pilot trials, more than 50,000 new customers started using the service. When the service was rolled-out to the full retail banking population six months later more than 1.5 million customers registered for their service.

Currently, FNB signs-up approximately 3,000 new customers per day to make use of the service. These numbers are astounding.

What else is Clickatell doing?
Clickatell works with 8,300 customers worldwide to deliver mobile messaging to billions. The company is being used by RSA Security, Entrust, S1 Corporation, Standard Bank, Moneybookers, Metropolitan Life and US Department of Homeland Security.