Israeli fraud prevention firm Forter last week won a Silver Stevie, one of the most prestigious awards in the business world, for taking a lead in the e-commerce and fraud prevention industries.
The Stevie, given out as part of the American Business Awards, are considered “the Oscars of the business world,” and are given only to companies with “fascinating and inspiring stories of success,” according to Stevie Awards president and founder Michael Gallagher.
Forter is the only fraud prevention company that’s willing to put its money where its mouth is – refunding money to customers if they make an incorrect call about a sale that a retail website loses money on.
When hackers steal credit card numbers, there’s really only two things they can do with them – either sell them, or use them. And using them means going to a website and trying to buy something with them. Unable to stop illicit use of those numbers, consumers have no choice but to rely on retail sites to determine if their account is being used illicitly.
That’s a problem for not only consumers, but for online retailers, who often can only catch fraudulent sales after it’s too late. Often, a purloined credit card number is used even before the consumer is aware that their identity has been compromised, and when that happens, sites and credit card companies foot the bill.
To prevent that, Forter provides a service that examines each sale, determining whether or not it appears legitimate.
“We provide a real-time automated decision service for web retailers that protects them from fraudsters,” said Forter CMO Bill Zielke. “Using our behavior detection algorithms, retailers can quickly determine what transactions are legitimate and which ones are fraudulent.”
“We remove the entire decision-making burden from the retailer – they don’t have to analyze metrics and make an educated guess, as our competitors require,” added Zielke “If we approve a transaction that is fraudulent – we take the hit, paying the site 100% of the failed transaction.
It’s a bold policy, but one that Forter feels quite comfortable backing, said Zielke. “We really have no choice but to be as accurate as possible because we only get paid on approved transactions.”
Forter’s made-in-Israel technology – the company’s founders, Michael Reitblat, Liron Damri, and Alon Shemesh are all graduates of the IDF’s Unit 8200 cyber-tech unit – uses machine learning to figure out if a transaction represents a problem, said Zielke.
“We implement a behavior analysis layer to see what the customer is doing on a retail site, including what pages they are looking at and what they are doing on those pages,” he explained.
Just like a trained security agent can spot a potential shoplifter in a brick and mortar store, Forter’s system is able to draw on a large database of user behavior on a site to see whether a specific user’s activities fit a legitimate pattern – or if the customer is a likely fraudster.
“There are many data points that can indicate this, like the type of products they are looking at as compared to previous purchases, information about their personal life based on registration information or location, and much more,” said Zielke.
In addition, the system looks at log-in location, IP address, billing/shipping information – in short, casting a very wide net that a fraudster is unlikely to slip through. According to the company, Forter is able to thwart 99% of phony transactions.
Besides keeping out thieves, the system’s big data analytics ensures that legitimate users are not the victims of a false-positive bias.
“We recently had a case where a user logged into a site with an African IP address, and a billing and shipping address in Washington, DC,” said Zielke. “That is the kind of transactions most other fraud prevention systems would have immediately banned, because of the disparity of the data. We approved it, because the customer’s behavior online was in line with acceptable patterns.
“And it turned our we were right,” added Zielke. “After checking the shipping address, we realized that it was a diplomatic mission of an African country, and the customer was a diplomat who was ordering products he was planning to bring home.”
Last November, the company, with 65 employees in Israel, received $15 million in Series B funding from New Enterprise Associates (NEA) and Sequoia Capital.
“During the last year we have approved hundreds of millions of dollars worth of transactions that have allowed merchants to boost their mobile commerce, accept more international customers and significantly improve the brand experience,” said Michael Reitblat, Forter CEO and co-founder.
“Our merchants are shipping faster, selling more and experiencing higher customer satisfaction. The support of NEA and Sequoia will help us respond to market demand among US e-tailers by expanding our sales and marketing efforts.”