This article is part of our ‘Most Promising Fraud Detection Startups’ series. We recently covered the most promising fraud startups in Europe as well.

The Israeli hi-tech scene is well known for producing cutting edge solutions across a variety of industries and verticals. Ecommerce fraud is no different.

A number of Israeli startups are pushing the envelope on the machine learning and AI techniques required to fight increasingly sophisticated fraud attacks. From phishing attacks to credit card skimming hacks, there is no type of eCommerce fraud problem these companies aren’t trying to solve.

Below are the profiles of the most promising eCommerce fraud detection startups in Israel you need to be keeping an eye on:

  1. Riskified
  2. Forter
  3. SimpleX
  4. BioCatch
  5. Identiq

Riskified

Riskified is one of the most well known hi-tech companies in Israel. Why? Because it carries the distinction of being the first eCommerce fraud prevention company to receive a billion dollar valuation.

Its tagline “Turn Shoppers into Customers” gives decent insight into why the company is so successful. It’s emphasis on the end-to-end customer experience shows its full comprehension of all aspects of eCommerce fraud prevention including preserving the customer experience by minimizing friction.

In a recent interview with Merchant Fraud Journal, the company gave some insight into its thinking when it highlighted the new GDPR regulations as one of the biggest challenges facing merchants in today’s environment:

“They will likely play it extra safe, and will rely on customer friction – mainly requiring shoppers to undergo Strong Customer Authentication (as mandated by PSD2), which we know leads to cart abandonment and drop off. In essence, PSD2 will leave merchants with less control over decisions, and will likely result in a drop in completed sales,” the company said.

Forter

Forter is another powerhouse eCommerce fraud prevention startup that was recently named ‘The Leader in E-Commerce Fraud Prevention’ by highly respected business consulting firm Frost & Sullivan.

Forter is known for their innovative technology, as evidenced by their strong commitment to helping merchants avoid friendly fraud. Friendly fraud is notoriously difficult to detect; because the authorized card holder is the one making the purchase, many of the red flag patterns associated with traditional chargeback fraud patterns cannot be used.

One of the ways merchants can avoid friendly fraud is to take the behavioral patterns of customers into account during the review process. In a recent interview with Merchant Fraud Journal, Forter provided insights into how it tackles this challenge using an advanced technique that gets insights from the potential customer’s online interactions.

“Scammers and spammers – or what may be deemed as marketplace abusers – are a growing phenomenon. Likewise, buyer-seller collusion, wherein fraudsters work together to benefit one another in marketplace settings, is increasingly common,” it said. “The ability to identify this kind of activity requires a sophisticated fraud prevention platform that is able to link identities to uncover connections that indicate collusion.”

SimpleX

SimpleX is an Israeli startup pioneer in the crypto currency space. It is an EU licensed Fintech solution that provides the infrastructure to convert between fiat currencies and cryptocurrency. It does this by allowing merchants to buy and deposit funds on crypto exchanges.

What’s innovative about this approach is, unlike traditional eCommerce fraud prevention methods that only work by identifying credit card fraudsters, SimpleX gives merchants the additional option to use cryptocurrency as easily as other digital forms of payment.

This gives merchants protection against traditional CNP fraud, while also allowing them to easily accept and handle cryptocurrencies — which come with no risk of chargebacks whatsoever.

Biocatch

Biocatch is another groundbreaking eCommerce fraud prevention startup that specializes in behavioral biometric detection. The use of biometrics to detect CNP fraud is an area of increasing interest.

There are a number of techniques used including monitoring how a shopper interacts with the website, as well as requiring a users to authenticate their identity using their body during a two-factor authentication process. The idea really came to the front of the industry in the last year when the European Union’s PSD2 directive made it a mandatory requirement within its borders.

Biocatch uses its behavioral biometric detection for a variety of use cases including identity profiling, continuous authentication, and social engineering scams. It can also be used to prevent account takeover fraud, another increasing threat that the FBI estimates cost merchants $1.7b in 2019.

Identiq

Identiq takes another innovative approach to preventing fraud by seeking to completely fill the lack of knowledge merchants have about who their customers are. The company created a ‘peer-to-peer’ validation network — known as F.A.I.R (Fully Anonymous Identity Resolution) — that verifies the identity of users. This allows merchants to validate the identities of users at sign-up, which in turns offers a friction-less experience to anyone in the network.

And for people who are concerned about access to their own data, it does this via a fully distributed network without sharing, copying, or transferring any of the information it collects. Therefore, it is both GDPR and CCPA compliant.

Finally, the network’s monitoring capabilities can also help merchants with common problems they face when screening orders for fraud such as verifying recent address changes, understanding the user’s reputation as a buyer through data enrichment, and reducing the risk of bad actors anonymously harming business reputations.

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