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Anonymity, privacy and onions: How Tor might impact online retailers

With all the talk recently of the privacy and anonymity that Bitcoin affords its users, not much has been said about the anonymous network that is the backbone for what The Economist called "a dark corner of the web." Tor, which was previously an upper-case acronym for The Onion Router, is a combination of a special browser and a network of several thousand volunteer servers. By using the Tor browser, a user's Internet activity is routed and re-routed through machines on the network, making it supposedly impossible to retrace the "layers" of the path.

In the words of The Tor Project, "it prevents somebody watching your Internet connection from learning what sites you visit, it prevents the sites you visit from learning your physical location, and it lets you access sites which are blocked."

Tor is the method that customers used to access the online black market Silk Road, which was shut down by the FBI in October. Edward Snowden used Tor for all of his communications with The Guardian. Originally a product of the U.S. Navy, the technology is now a darling of the community advocating for better privacy rights.

So what do online retailers need to know about Tor? We posed these questions to Wendy Breakstone, Director of Marketing for Service Objects, a contact and data validation company. They recently published the white paper "Tor: The Good, The Bad, The Anonymous."

Retail Customer Experience: Tor is a very complex subject. If you wanted to simplify it to just the basics that retailers need to know, how would you explain it to them?

Wendy Breakstone: The Tor Network, and other anonymous proxy services, hide the location of the computer that is being used, allowing the computer user to conceal his or her location and identity.

RCE: Are any major retailers doing anything specifically in regards to Tor — that is, monitoring for its usage, particularly with e-commerce transactions? Or would you say it's not on the radar of most retailers yet?

WB: While we can only speculate the number of retailers with Tor on their radar, we can say that most major retailers use a variety of data and contact validation tools to detect the accuracy and legitimacy of the transaction they receive. IP address validation is an important step in the detection and prevention of fraud entering your system because it informs you of a user's location, which is a key piece of information to protect against real-time fraud. Along with IP address validation, retailers use SMS/phone verification and address validation to verify orders and improve shipping times.