VerifySmart's New Card Fraud Prevention and Detection Technology Targets Multi-Billion Dollar Financial Fraud Loss Market; Lets Consumers Off The Liability Hook

VerifySmart(TM) Corp. (VSMR: OTCBB): ("VerifySmart" or the "Company"), a global leader in secure and fraud free payment processing services, introduces a new 'no-fault' fraud protection solution technology (the "Technology") for credit and debit card holding consumers, and unprecedented fraud detection and prevention protocols for merchants and financial institutions.

VerifySmart's Technology comes at a watershed moment in the global financial community, when astronomical credit and debit card fraud losses make headlines with alarming regularity. While most financial institutions are hesitant to post actual credit and debit card fraud loss numbers, the figures are staggering as far back as 2005, when an FBI report indicated that credit card fraud represented the majority of the $315 billion US financial fraud loss for that year. A recent European study reported that more than 22 million adults fell victim to credit card fraud in 2006.

Financial institutions and consumers alike hoped that the recently introduced, so-called Chip and PIN technology, first introduced in the UK, would drastically reduce credit and debit card fraud, but a 2008 APACS (Association of Payment Clearing Services) report indicates a loss prevention gain of just 0.02%, after Chip and PIN technology was adopted (0.14% fraud losses as a percentage of card turnover pre Chip and PIN, versus 0.12% post Chip and PIN).

An unwelcome sidebar disadvantage of Chip and PIN, VISA, and other currently available so-called credit and debit card fraud prevention and detection technologies is the assumption of 'total card holder liability' made by many financial institutions. That is, the widespread practice, by banks and other financial institutions, of assigning loss liability to the cardholder on the assumption that the cardholder either wrote down or otherwise disclosed their PIN number and are therefore liable and accountable for the loss. The apparent growing lack of faith in Chip and PIN and other card fraud prevention technologies is evident in the fine print.

One of Canada's oldest banks introduces its faith in the new Pin and CHIP technology policy to credit card customers in writing as follows: "If a cardholder fails to comply with any obligation in the section entitled personal identification number (PIN) and someone other than the cardholder makes any PIN-based transactions on the Visa account, the cardholder will be liable for those transactions and any interest, fees and losses incurred...." The same national bank outlines debit card liability in their cardholder agreement: ""Contributing to unauthorized use: if someone uses your bank card or PIN without your authority but your actions (or inaction) contributed to that unauthorized use, you are responsible for all losses...."

All popular and available credit and debit card fraud prevention and detection systems have a single element in common, and that is the single element. Once a credit or debit card has been stolen, a seasoned criminal or fraud expert can quite easily breach required securities, assume an identity, and successfully execute several commercial transactions - at the expense of the card holder (fraud and theft insurance notwithstanding).

VerifySmart's Technology adds a second, hacker-safe layer of protection, and several levels of reassurance for consumers and financial institutions alike, by involving a second element, and with that second element, a secure 'double-check' to the transaction process.

How VerifySmart(TM) Technology Works

In smart contrast to Chip and PIN, VerifySmart(TM) provides a complete solution to lost or stolen cards, identity theft and cloned cards while putting control of the transactions directly in the hands of the card owner. VerifySmart(TM) has developed key technology that is simple yet effective. The cornerstone is an authentication model that decouples the verification and PIN process from the physical card or transaction medium offering the industry a new and proven fraud reduction mechanism.

VerifySmart's key benefit is a two-part authentication whereby a second source (mobile phone or PDA and a PIN) of identification which cannot be forged, is required to complete the transaction.

VerifySmart's credit and debit card fraud detection and prevention technology is patent and patent-pending (PCT approved) in 29 countries ranked by strategic importance and wireless penetration rates.

In addition, using VerifySmart's credit and debit card fraud detection and prevention technology, card transactions and other applications, such as internet transactions can be verified without requiring the banks and merchants to invest in new equipment and without major modifications to legacy systems.

VerifySmart(TM) Technology provides for verification through the end client's mobile device, such as a cell phone, with the transaction completely under the control of the card holder at all times. The process is simple and secure, uses technology that consumers and businesses alike are familiar with, does not require new hardware and only takes seconds to complete. VerifySmart's methodology uses a two factor system to verify both the transaction and unique owner credentials in real time creating a security model that is effectively impossible to breach.

VerifySmart's debit and credit card processing occurs in less than ten seconds, as follows:

    -  The merchant (or ATM machine) swipes the customer's card in the normal
       manner.
    -  The debit signal transmits to the bank but before entering the bank's
       system it is directed by VerifySmart(TM) to the card holder's mobile
       phone;
    -  The card holder's mobile device is unique as to its phone number and
       identity code so the transmission is secure to that one device;
    -  The card holder receives a cell phone message that a transaction is in
       progress with their card for a named merchant and asks for
       authorization;
    -  The card holder then enters their unique PIN number to authorize the
       transaction or refuses the transaction (if they do not acknowledge
       with their PIN the transaction will fail);
    -  Upon receiving the authentication signal from the owner, the
       VerifySmart(TM) system allows the signal to complete its journey to
       the bank and the merchant receives the 'all clear'.

About VerifySmart(TM)

VerifySmart(TM) Inc designed and developed a Proprietary Hardware/Software Solution that solves Credit/Debit Card fraud by using two Factor Authentication.

The Company's Core Technology is designed to meet the needs of the Security challenged Transaction Processing Industry. Present day solutions, such as Verified by Visa, Chip and Pin and CVV Code (all which can be compromised) have not reduced payment card fraud by any significant factor.

The VerifySmart(TM) solution has reduced fraud to zero in earlier production pilots. the Company's proven and highly scalable solution is gaining worldwide attention and placing VerifySmart(TM) at the forefront of the fraud prevention revolution.

Forward Looking Statements

This current report contains "forward-looking statements", as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements in this current report which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future.

Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainty of financial estimates and projections, the competitive and regulatory environment for start up software companies, stock market conditions, unforeseen technical difficulties and our ongoing ability to operate a business and obtain financing. These forward-looking statements are made as of the date of this current report, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements.

Although we believe that our beliefs, plans, expectations and intentions contained in this current report are reasonable, there can be no assurance that such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our annual report on Form 10-K for the 2008 fiscal year, our quarterly reports on Form 10-Q and our other periodic reports filed from time-to-time with the Securities and Exchange Commission pursuant to the Securities Exchange Act.

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    www.verifysmart.com

SOURCE VerifySmart Corp.