This article is part of our series of the most promising fraud detection startups across the world. We recently profiled European as well as Israeli fraud technology companies in the industry.

All of the eCommerce fraud startups on this page are made in the U.S.A. Americans are known to either go big or go home, and these companies definitely fit that mold. Below is our list of the most promising fraud detection startups in America in alphabetical order.

  1. ClearSale
  2. Fraud.Net
  3. Kount
  4. NS8
  5. Sift
  6. Signyfd

They excel across a wide variety of technologies and verticals, bringing American ingenuity and innovation to merchants’ most difficult problems like leveraging big data and machine learning technology, building excellent customer experiences, and cross-collaborating across payments systems so sellers can get the best use out of the most amount of data possible.

ClearSale

ClearSale is a Miami based eCommerce fraud detection platform. Although bootstrapped and has been around for almost a decade, it boasts over 1000 employees across the globe. ClearSale also posses a very impressive technology solution portfolio and is trusted by over 3,000 merchants to handle their fraud prevention services. The company has also recently acquired an eCommerce startup Send4.

ClearSale’s fraud technology is based on a heavy combination of Machine Learning algorithms and human review. In a recent interview with Merchant Fraud Journal, Executive Vice President Rafael Lourenco mentioned the flexibility and added layer of human oversight allow them to maximize approval rates without compromising on higher false decline rates.

Here’s an analogy that explains the danger of AI without the use of human review: A driverless car that sees its first stop sign in the real world will have already seen millions of stop signs during its programming in which a “mental” representation of what a stop sign is was built. Under various light conditions, in good weather and bad, with and without bullet holes, etc. the stop signs that it is exposed to contain a bewildering variety of information.

Rafael Lourenco, ClearSales Executive Vice President in an Interview with MFJ

Given its technology, size and position in the market we felt it was necessary to profile as one of the leading fraud solutions to watch in the next few years.

Fraud.net

Although Fraud.net is still privately held with no VC funding rounds raised, it merits inclusion on our list because of the sheer volume of high-quality eCommerce fraud prevention services it provides. This list includes things you don’t find offered across-the-board in the industry, such as dark web intelligence, marketing intelligence, and data mining products that it states help merchants reduce their expenses by 49.2%.

In addition to its technology, the company remains at the forefront of the industry’s research into fraudster patterns, It releases numerous reports and analysis on a variety of topics and industries throughout the year.

For example, in an interview with Merchant Fraud Journal, it discussed research it did into the travel industry. Amongst other counter-intuitive insights it revealed that it’s actually lower ticket items that are at the highest risk of friendly fraud. The reason? Constant price fluctuations make consumers feel ‘justified’ in charging back a fare when they realize they can get a better one on the same route a few days after purchase:

“Lower ticket items (in this case, lower-priced tickets) are more often the target of friendly fraud — that is, items that are purchased by a legitimate customer, who then claims it was an unauthorized charge when they are no longer a good deal. (A common example of this is when a ticket is purchased, and then contested when the same route goes on sale at the last minute.)”

Cathy Ross, Co-Founder and President of Fraud.net, in an interview with MFJ

Research like this is an excellent contribution to the understanding of fraudster behavior, and makes Fraud.net a company to watch as it turns its analytical firepower on the fraud problem as it evolves.

Kount

Kount has raised nearly $100m for its eCommerce fraud platform. What makes this company particularly worthy of inclusion on our list is its pace of innovations. In a space where fraudsters are constantly evolving and shifting their strategies and tactics, Kount does more than nearly any other company to keep up by creating new technologies.

In October of 2019 it launched a new collaboration with the Visa Merchant Purchase Inquiry (VMPI), focused on detecting and preventing friendly fraud — one of the most consistently difficult problems for merchants to solve.

Then, just six months later, it launched its ‘Identity Trust Global Network’. In an interview with Merchant Fraud Journal, Rich Stuppy, Chief Customer Experience Officer, laid out the company’s vision for a solution that embraced a customer-data-centric model. Moving with the times, this model will focus on maximizing the customer experience and reducing false positive declines by 70%.

The Identity Trust Global Network includes data from 32 billion annual transactions across more than 75 industries and over 6,500 customers, and it takes a network with the depth and breadth of data like Kount’s to understand the difference between customers that require a higher-friction experience and those who don’t.

Rich Stuppy, Chief Customer Experience Officer in an interview with MFJ

NS8

NS8 is an eCommerce fraud prevention startup based out of Las Vegas, NV. It’s work integrating its platform with other extensions across other consumer facing products is a solid approach that is vastly under-utilized by the industry as a whole.

For example, it offers an integration with payment protection firm Verifi that allows merchants to benefit from its payment processing data to learn of potential disputes before they occurr. The additional lead-time is a huge benefit when it comes to achieving a higher win rate when navigating the chargeback representment process. These extensions can help merchants stay ahead of other problems that indirectly impact fraud prevention and the ability to capture consumer revenues such as downtime costs, and invalid traffic.

Another reason for NS8s inclusion on this list is its excellent Shopify fraud prevention app. In addition to integrations with Google Analytics, Google Adwords, and WhitePagesPro, the app also allows users to easily do real-time user-scoring, SMS based verification, and more.

Sift

Sift’s platform allows merchants to not only fight fraud themselves, but also prevent fraudsters from using merchants’ platforms to launch fraud attacks against customers and users. Its ‘content integrity’ functionality allows platform moderators to identify malicious content placed by spammers and scammers looking for an entry point to undertake account takeover attacks against legitimate users. It claims a 90% success rate in removing malicious content, in real-time.

In addition, Sift stands out for its strong commitment to industry collaboration and pushing the capabilities of data science forward. The company signed a partnership with Chargeback Guru’s in September of last year, which led to the launch of a joint venture called “360 Degree Chargeback Protection”. The partnership is designed to allow the two companies to combine their data collection and processing capabilities to do more to help consumers fight fraud.

In Mechant Fraud Journal’s coverage of the agreement, we highlighted Sift’s interest in Chargeback Gurus’ data analytics expertise as a key reason for their involvement in the agreement. We also quoted Geoff Huang, VP Product at Sift, who stated:

“Integrating [Chargeback Gurus’] data into our platform helps our merchants understand the root causes of their chargebacks, prevent revenue loss and increase customer retention.”

This kind of collaboration is Merchant Fraud Journal’s mission, marking Sift as a worthy inclusion in our list of top American eCommerce fraud prevention startups.

Signifyd

Signifyd is one of the world’s leading eCommerce fraud prevention companies, with nearly $200m in funds raised. It specializes in a number of areas including revenue protection, abuse prevention, and payments compliance.

It was one of the first companies to bring advanced technology to the industry. This market leader status allows it to boast that 97% of purchases made on the web today come from merchants known to its system. It puts all that data to good use, with an AI-powered platform that increases merchants’ conversions rates by 4%-6% on average.

In an interview with Merchant Fraud Journal, 80s tees founder and CEO Kevin Stecko talked about how his company trusts Signifyed enough to run every order it takes through the platform.

We use Signifyd to score all of our orders, and we submit orders that we think might be fraudulent to them for insurance. If they insure them we ship them, if they don’t we will decide to dig further or cancel the order from there.

80s tees founder and CEO Kevin Stecko in an interview with MFJ

The willingness of customers to cite the company by name when talking about fraud prevention is a testament to the level of trust it commands in the market.

These rising startups reinforce the fact that the eCommerce fraud detection industry is flourishing and growing at an exponential rate. As more and more transactions move online, the need for these solutions becomes a must-have for merchants.

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