Using Passkeys to Prevent Fraud

Passkeys, built on FIDO2 and WebAuthn standards, offer a robust solution for preventing fraud by eliminating the vulnerabilities associated with traditional passwords and one-time passwords (OTPs), which are susceptible to phishing, breaches, and interception. By using public-key cryptography, passkeys ensure that private keys remain on the user's device, making them phishing-resistant and device-bound. This approach significantly enhances fraud prevention, particularly in scenarios like account takeover (ATO) fraud, by ensuring that sensitive actions such as financial transactions or freight rerouting are only authorized if a user completes passkey authentication on their registered device. The concept of step-up authentication further strengthens security by requiring additional verification for high-risk actions, ensuring that only the legitimate user on the correct device can authorize such actions. This method not only improves the user experience by reducing the need for app-based TOTPs or phone calls but also provides a powerful fraud control mechanism applicable across various industries.