Choosing a Fraud Detection Software

The world of fraud is a jungle out there. Not only is there a wide variety of fraud and fraudsters to combat but there is a whole menagerie of fraud detection solutions to help you do just that. Sometimes it can be hard telling the difference between them.

A major distinction should be made between systems that fight true fraud pre-sale and post-sale solutions for friendly fraud (AKA chargeback fraud). These are like two different species. True fraud prevention solutions must not only catch fraud before it happens, but also avoid adding significant friction into the customer checkout experience. Merchants lose more money to false positives generated by legacy anti-fraud solutions than they do from actual fraud, so be on the lookout for how these systems affect customer experience.

Friendly fraud cannot be addressed using the same techniques as true fraud, since it involves legitimate customers behaving normally but who wish to avoid paying for purchases. You need a solution specially adapted to proving the authenticity of transactions to tackle these chargebacks post-sale. To fight friendly fraud chargebacks you should find a solution tailored to the needs and processes of your business. This will ensure the highest success rate possible. Besides that, there are major differences in the pricing of different solutions but we’ll save an explanation of that for a deep dive into friendly fraud solutions.

Instead, to assist you in your daily fight against true fraud we’re going to provide some guidance on what pre-sale anti-fraud solutions are out there and what distinguishes them from each other. We will only cover some of the major platforms and recent startups and not complementary service vendors such as data providers. This is just an initial guidepost for your own research. As always, do your own due diligence and ask the right questions when talking to prospective solution vendors.

Originally founded in the high-fraud Brazilian market, U.S.-based ClearSale has been fighting transaction fraud for over 20 years. ClearSale combines artificial intelligence with one of the largest human card-not-present fraud prevention operations around. It utilizes technology and expert manual review to ensure some of the highest approval rates in the industry. The company also claims to be the first to offer an optional fraud chargeback guarantee, meaning participating customers do not lose money for chargebacks that come back with a fraud reason code. The advantage you get with ClearSale is depth of experience being served by a company with over 4,000 merchant clients including major brands in a wide variety of verticals and geographies.

Forter’s strength lies in its technology and founders’ experience. The founders earned their chops serving in Israeli military intelligence and later fighting fraud at PayPal, the world’s premier payment service provider for eCommerce. Forter uses machine learning and a variety of data science techniques to provide fully automated real-time decision making to accept or decline transactions. The company’s solution analyzes over 6,000 individual data points across the entire customer journey and uses a global network and identity database to identify fraudsters before they can hurt your business. The company also says it tailors its solution to each customer’s risk profile and pain points to achieve maximum accuracy. Forter, like ClearSale, also offers a fraud chargeback guarantee. In short, if you want to get rid of manual reviews and ensure high-speed decision-making for transactions this could be a good option.

This Idaho-based company is owned by Equifax, the consumer credit reporting agency. Kount claims its Identity Trust Global Network is the largest data network of fraud and trust-related signals. The company uses its trust network to protect against not only payment fraud but also account takeover and phony account creation. Kount Command, the company’s eCommerce fraud prevention solution, combines machine learning based automated decision-making with a case management tool for manual reviews. It uses the trust network to immediately evaluate transaction data and generate a safety rating, Omniscore. Custom business policy thresholds based on Omniscore results are used for transactions to either approve, reject or hold for manual review.

Riskified is similar to Forter in that it has a totally automated machine learning-based solution that offers a chargeback guarantee. The company offers performance-based pricing and charges merchants only for approved transactions that generate sales. Since its start as a payment fraud solution, Riskified has developed a suite of products that help merchants recapture good revenue and prevent losses at every stage of the online path to purchase. Lately, Riskified has been promoting heavily Deco, its real-time solution for recovering orders lost to card-not-present payment authorization failures.

While a relatively new solution, we’d be remiss without mentioning nSure.ai due to its speciality in the high-risk digital goods category. The company claims an amazing 98 percent approval for digital good transactions. The company uses machine learning to analyze 519 different features looking at the user behavior, transaction lifecycle and user lifecycle to reach decisions regarding transactions. nSure.ai’s technology operates in real-time, processing transaction decisions in less than 300 milliseconds to facilitate a smooth customer experience. The company also offers a chargeback guarantee.

What distinguishes Perseuss from the pack is its history in the travel space. Perseuss was founded by a group of seven European airlines that were looking to share data and experiences fighting fraud. The company’s AI-based fraud detection is powered by over 3.2 billion data elements to identify legitimate customers, thereby decreasing both the number of chargebacks and the number of false positives. Perseuss’ FACT tool enables merchants and issuing banks to alert each other in case of suspicious transactions, and present confirmed fraud cases to law enforcement. The tool was originally designed for use in Europol’s Global Airport Action Days, to tackle fraud crimes at European airports. While having expanded beyond European airlines to include a wider clientele, Perseuss is still largely used in the travel industry.

Another European outfit, SEON originally developed as an anti-fraud solution for the cryptocurrency space and soon went into other high-risk verticals like gaming. The company now has a U.S. office and clients besides its European operations headquartered in Budapest. SEON offers a modular approach to fraud prevention with its Intelligence Tool and Sense Platform. The Sense Platform feeds all relevant data in real-time into a scoring engine, which calculates risk based pre-set rules tailored to your business vertical, customizable rules based on your historical data and auto suggested rules delivered by SEON’s machine learning engine.

Sift is a fraud prevention solution powered by a cloud-based machine learning platform. Sift examines company data and fraud/abuse flagged by fraud analysts at customer companies instantly. The platform analyzes more than 16,000 fraud signals that are updated in real time from customer activities and events to provide a score that is used by fraud analysts to approve or decline interactions with users. Sift’s solution doesn’t just tackle payments fraud but also content abuse, promo abuse and account takeover, among others. The company says that its customers see on average 50 percent less fraud after using Sift.

Signifyd claims to be the world’s largest provider of guaranteed fraud protection for ecommerce with more than 10,000 customers. It’s solution utilizes automated machine learning along with manual review analysts to minimize the amount of friction fraud prevention adds to merchants’ sales pipelines. The company offers two plans: On-demand Assurance and Complete Assurance, both of which come with a fraud chargeback guarantee.
On-demand Assurance allows merchants to manage fraud themselves and only ask for help when necessary. Once requested, a certified fraud expert is assigned to help evaluate the order and make the decision to decline or accept it.
Complete Assurance enables merchants to completely outsource their fraud prevention to Signifyd, which then makes the decision about whether to accept or decline entirely on its own.

The list is not exhaustive. We have included both major platforms and some smaller startups with strong expertise in specific business verticals. There are at least a half-dozen more pre-sale anti-fraud solutions out there, but this should give you a good sampling of the market in terms of providers.

Feel free to contact us if you would like more information regarding our opinion of different pre-sale anti-fraud solution providers and how implementing them will affect your chargeback problem.