The lives of merchants that use email verification in their fraud prevention efforts has gotten more complicated. As part of privacy initiatives aimed at meeting the demands of Gen Z customers, when Apple announced iOS 15 it included a feature called Hide My Email, which lets users create anonymous email addresses that automatically forward to their personal inbox. Popular password manager 1Password is now offering a similar service. While this enables users to enhance their online privacy and avoid spam and marketing emails cluttering their inbox, it is a headache for fraud professionals.
Using email addresses to identify known users or as a data point when scoring the risk of a transaction being fraudulent has become increasingly popular with merchants trying to identify and prevent fraud in their e-commerce transactions. Email addresses have been relatively static pieces of information—consumers tend to have them for a long time, so they have value in helping establish identity. Newer email addresses with less history tend to accompany more risky activity.
Services like Hide My Email will make that data point less useful for fraud prevention. According to Karisse Hendrick, principal at Chargelytics Consulting, merchants may have to modify the way they are using emails in their fraud prevention and transaction analysis.
“Email verification still has value, but you may need to reassess how much value your fraud system places on this single identifier,” Hendrick explains. “Otherwise, you run a significant risk of a high false positive/insult rate, which translates to lost revenue—not only in the loss of the value of a first transaction, but also customer lifetime value.”