A Sound Guard Against E-Fraud

A Sound Guard Against E-Fraud

Legal Services Enter Outsourcing Domain

U.S., British Companies Send More Work to India; Patent Applications Are Big

Updated Sept. 28, 2005 12:01 a.m. ET
It happened with tech support, financial services and catalog order-taking. Now, a growing number of U.S. and British companies as well as law firms are outsourcing legal work to India.

The practice started a few years ago with simple word processing and filing services performed by nonlawyers. But increasingly, squads of experienced but inexpensive lawyers based in India are doing things ranging from patent applications to divorce…

Want to Charge It? You’ll Have to Talk to Your Credit Card

THIEVES who steal a new kind of credit card for an online shopping spree are likely to be disappointed. That’s because a California company has designed a card with an unusual security feature: it works only when it recognizes the voice of its rightful owner.

Enclosed in the card is a tiny microphone, a loudspeaker and a chip with voice recognition chip. To use the card, its owner must speak a password, which the chip compares with a sample recorded on the card. If the voices match, the card emits a set of beeps that authorize the transaction over the telephone or through a microphone on the shopper’s computer. If the voiceprints don’t agree, the card will not beep.

Designed by Beepcard, a company in Santa Monica, Calif., the device is still in prototype form. But one day it may be used to verify ownership over the telephone or the Internet, reducing the cost of fraud for consumers and merchants.

“This card makes it possible to turn a high-risk transaction over the phone or computer into a low-risk one,” said Jon Callas, chief technical officer at the PGP Corporation in Palo Alto, Calif., which develops encryption software used mainly for e-mail.

Credit card fraud is a costly problem for consumers and merchants alike, Mr. Callas said. Merchants pay $2 to $5 on each $100 charged to credit companies, depending on their contracts. “The riskier the credit companies consider the transaction, the more they charge,” he said. Transactions made without the physical presence of a card are considered highly risky. “This system turns a card-not-present transaction into a card-present transaction,” Mr. Callas said.

Beepcard already makes a security card, said Alan Sege, chief executive of the company. This card is used, for instance, by students to gain access to college services online. A student holds the card up to a PC microphone and presses a button on the card, and a series of coded beeps is emitted by a small speaker. “The card calculates a one-time cryptographic signal” that identifies the user to the server and allows access, Mr. Sege said.

The new version of the card uses the same system. “Now it won’t beep unless you authenticate it with your voice,” Mr. Sege said. It could be used with a computer microphone for an online transaction, or over the telephone.

A number of companies are considering using the new card, he said, including Providian Bank.

Mr. Sege hopes that the card will have uses besides authentication. “It’s convenient to have a sound recorder in your credit card,” he said. Such a device might be used as a memory prompt, for instance, to read back a shopping list.

The width and length of the prototype card have been pared to match a credit card. “But it’s still about the thickness of a printed circuit board,” said Nir Dvash, an engineer for the company.

To use the card, a person selects and says a password that is stored in the card’s memory. The system takes into account some variations in a voice to accommodate a cold or background noise. “It has tolerances that can be changed so the user can choose a security level,” Dr. Dvash said. For online shopping at home, for instance, where the risk is low, the user could set the device to accept a wide variation in voice. “But if you go out onto the street you should set it high,” he said, because of the greater risk of being overheard or of theft.

Patrick McDaniel, a senior researcher at AT&T Labs in Florham Park, N.J., who specializes in security, said the new card was a good idea. “The use of encryption for one-time passwords sent in beeps has been around for a decade,” he said, and voice recognition, even longer. “But the combination of the two is novel.”

Yet he pointed to difficulties that must still be overcome. “It will have to be very robust,” he said, to withstand heat, cold and the bumps of back-pocket storage.

Problems could also surface with the voice recognition program. “Accurately identifying the speaker is a difficult task at best,” he said. “Throw in blaring music and you may have a problem.”

David Nahamoo of I.B.M.’s Thomas J. Watson Research Center in Yorktown Heights, N.Y., who has worked in speech technology for 20 years and heads conversational biometrics research at the lab, agreed that voiceprints by themselves were not perfectly reliable. “With voiceprints today, there is a 2 percent error rate of false acceptance and false rejection,” he said.

To get around this problem, the I.B.M. voice authentication system is based not on the limited processing power of a chip on a card, but on the might of a server. It combines voiceprint matching with a rotating set of questions that the user must answer before gaining access to an account.

“A set of random questions is more secure,” Dr. Nahamoo said, to back up biometric identification. “Even if someone eavesdropped and magically got access to your voiceprint, the knowledge won’t be there to answer the questions,” he said.

Even in the imperfect world of voiceprints, Mr. Callas said, the Beepcard may have a chance at success, because of its combination of encryption backed up by voice biometrics. “It becomes convenient and good enough,” he said. “And ‘good enough’ security is extraordinarily important. Most of the world works on ‘good enough’ security.”

Obama campaign first to accept donation by text message

WASHINGTON — Nine years ago, then-Vermont Gov. Howard Dean broke new ground when his campaign used the Internet to help raise what were then record sums for his insurgent White House bid.

Now President Obama’s campaign – whose digital strategist hails from Dean’s Internet operation – is pouncing on another technological tool, announcing that it would be the first presidential campaign in history to accept donations via text message.

Obama campaign officials hope this new method of making donations will boost contributions from small donors – particularly young ones – as the 2012 race heads into its final stretch.

“Grass-roots giving is powering this campaign,” campaign manager Jim Messina said in a statement.

“Accepting small donations by text message will help us engage even more grass-roots supporters who want to play a role by donating whatever they can afford to the campaign – and get the president reelected in November,” he added.

The program will be available this week for customers of Verizon, Sprint, T-Mobile and U.S. Cellular, who will be able to text “GIVE” to the campaign’s short code: 62262, which spells out O-B-A-M-A. AT&T and other carriers are expected to sign on in the near future.

Republican challenger Mitt Romney’s campaign also plans to begin accepting text donations soon.

Donations via cellphone numbers will be capped at $50 a month per candidate or political committee and $200 an election cycle — the maximum an individual can give anonymously. A portion of that money will go to fees for the wireless carrier and a third-party aggregator that will facilitate the transactions. Donations will be charged to a contributor’s wireless bill.

Once a mobile number reaches $200 cumulatively for a particular committee – the threshold at which donor information must be reported to the Federal Election Commission – a campaign can block the donation or request information from the contributor in order to accept it.

“It’s going to be a political tsunami,” said Democratic strategist Mark Armour, a consultant to payvia, the third-party aggregator that will facilitate the transactions. “Get ready for millions of small donations.”

Text donations are already widely used by charities, such as the American Red Cross, which have successfully raised millions of dollars via text during natural disasters and other crises.

Political campaigns have been eager to harness mobile phones in their fundraising, but the method faced legal and technical obstacles.

Two years ago, the FEC considered a similar text message donation plan by the wireless carrier association CTIA, but the proposal foundered when the group could not figure out how to comply with the requirement that campaigns deposit donations within 10 days, among other technical challenges.

This June, in a rare act of bipartisan agreement, the Federal Election Commission approved a text donation proposal by Los-Angeles based m-Qube Inc., a plan supported by both the Obama and Romney campaigns.

The proposal got held up as wireless carriers asked the FEC for clarification on several details, a delay that kept Obama campaign officials – eager to have the plan in place for next month’s Democratic National Convention — waiting anxiously. In late July, Obama campaign lawyer Robert Bauer called FEC commissioners to ask them to respond to the carriers quickly, expressing concern that the campaign was running out of time to implement text donations before election day.

The FEC gave final blessing to the plan Aug. 14.

Alan Sege, general counsel of payvia – a new company spun off of m-Qube last month – said the company has already signed multiple federal campaigns as clients.

“Our hope is this is going to become one of the definitive campaign finance channels for the 21stcentury, because it’s immediate and anybody can contribute to the political committee of their choice, using the completely familiar interface of sending a word to a phone number,” Sege said.

Peter Pasi, a Republican digital media consultant, cautioned that it remains to be seen whether text donations “will move the needle in a huge way.”

“It’s hard to imagine there are thousands of donors that haven’t given to either candidate who will now be motivated because this capability now exists,” he said, adding that text donations usually are most effective when connected to major events.

But he noted that with the party conventions looming, “both parties have huge nationally televised events over the next two weeks, so this will provide them the opportunity to maximize the potential of this medium.”

FEC allows campaign contributions via text message

The Federal Election Commission gave the go-ahead Monday evening to using text messages to donate money to federal candidates and committees, a move advocates hope will boost the participation of small contributors and counterbalance the influx of massive donations.

In a rare instance of bipartisan agreement, the six-member panel unanimously approved a proposal by two political consulting companies – one Republican and one Democratic – to work with a third-party aggregator to collect donations by text. The decision means that campaigns can begin accepting donations via text messages on cellphones, a potentially lucrative new avenue.

[Updated at 7:48 p.m. :

[The program still needs to be approved by wireless carriers, which could happen speedily, said Alan Sege, executive vice president and general counsel for m-Qube, the aggregator company, a subsidiary of the Los Angeles-based Mobile Messenger Inc.

[Sege came up with the concept with Democratic consultant Mark Armour, who called the FEC’s decision “a real game-changer for campaigns.”

[“The FEC just unlocked an entirely new fundraising stream of millions of small, easy donations,” Armour said.

[Craig Engle, head of the political law practice at the firm Arent Fox, who crafted the proposal with fellow election law attorney Brett Kappel, said the new method would be “the future of campaign contributing.”

[“By permitting citizens to make small-dollar contributions to political candidates via text-messaging, the commissioners have greatly enhanced the ability of millions of Americans to make their voices heard in the electoral process,” Engle said.

[The move was also applauded by groups seeking to strengthen campaign finance regulations.]

“With billionaires and ‘super PACs’ drowning out the voices of hardworking Americans, text message campaign contributions can enhance the role of small donors and, combined with public matching funds, could provide a megaphone for the masses,” said Nick Nyhart, president of Public Campaign, one of 10 organizations that urged the commission to approve the plan. “The FEC did the right thing today.”

The proposal was also supported by the campaigns of President Obama and Republican challenger Mitt Romney.

“The American public has embraced texting as an important form of communication and commerce, and it is time for federal regulations to catch up,” the Romney campaign’s lawyers wrote in a letter to the commission.

Under the plan approved Monday, cellphone numbers will be capped at giving $50 a month per candidate or political committee – the maximum an individual can give anonymously.

[Updated at 7:48 p.m.:

[Once a mobile number reaches $200 cumulatively for a particular committee – the threshold at which donor information must be reported to the FEC – a campaign can block the donation or request information from the contributor in order to accept it.

[Both m-Qube and the wireless carriers will collect a portion of the donation in fees.]

Two years ago, the FEC considered a similar text message donation plan by the wireless carrier association CTIA, but the proposal foundered when the group could not figure out how to comply with the requirement that campaigns deposit donations within 10 days, among other technical challenges.