Fraud detection company Forter raises $32M
The company will use the funding to continue its expansion into the United States
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With high profile breaches over the last few years, especially the one that hit Target, everyone knows that fraud detection is needed. Right now, though, fraud prevention is treated as cost containment. In addition, as it is right now, it actually causes friction at checkout, with solutions that are expensive and hard to scale.
Fraud detection company Forter has the idea that fraud prevention ought to be in line with wider company goals, enabling sales and a great customer experience.
The company has closed $32 million in Series C funding it was announced on Thursday, in a round that was led by Scale Venture Partners,with participation from previous investors Sequoia Capital and New Enterprise Associates (NEA). With this funding the company has now $50 million in venture capital.
Forter says it is the the first fraud prevention company to offer an automated, real-time Decision as a Service solution for online merchants.
"We use machine learning, sophisticated algorithms, a huge amount of data, behavioral analysis, cyber intelligence and elastic identity - all leveraged and combined in just the right ways through the human expertise, experience and insight of our researchers, both analytical and technical," Bill Zielke, CMO of Forter, told me.
The idea is that the company doesn;t look at individual transactions, a.k.a. "the manual review approach." Instead it looks at trends, patterns and people.
"For example, we know what a traveling student buyer looks like. We know how they behave, how they order, what to look for. So if there’s a fraudster pretending to be one, we’ll know, because it’s so difficult to get every single detail right when you’re pretending. You’d need to ace it on more than 7000 data points and all the complex interlacing connections between those points," said Zielke.
Forter was founded in 2013, by CEO Michael Reitblat, COO Liron Damri and Alon Shemesh Chief Analyst after they served together in the Israeli Army.
After the army, they joined Fraud Sciences, a fast growth start-up that first introduced the fraud chargeback guarantee, which was acquired by PayPal for $169 million in 2008. They reunited again in 2013 fo form Forter.
The company differentiates itself from legacy fraud prevention companies, who rely on traditional fraud prevention methods, such as "inflexible rules engines and manual review, and provide risk scores that leave the responsibility and liability with the retailer."
There are also companies that run according to a similar model, but use more advanced technology, including machine learning, as well as those companies that are able to offer decisions instead of scores, and can take care of the fraud for a retailer and offer a chargeback guarantee.
"We use highly sophisticated technology that’s updated many times a day, we offer decisions for every transaction in real-time, and full automation. It’s not outsourcing manual reviews, it’s abolishing them completely," said Zielke.
"That’s the only way you can be truly real-time, for truly excellent customer experience, and truly scalable, so that that excellent experience remains even in the busiest holiday sales season of a huge retailer. Quite simply, no one else is able to offer that."
Right now, Forter says it has large clients in every major vertical category. Though the pain point often differs among segments and companies, but there’s no such thing as “no fraud problem.”
For example, the service is used by digital goods merchants who want to have real-time fraud prevention.
"If you’re buying a gift card on Raise or Gyft, you don’t want to wait until your order has gone through manual review. You want it right now. That’s the whole point of digital goods," Zielke explained.
The company also recently launched with one of Europe’s largest online travel aggregators, who wanted real-time answers for every single transaction. Fiverr, which deals in digital goods and at scale, needs both the real-time aspect and the scaling ability.
The funding will go toward three area. First, advancing the company's vision.
"The funds will help advance Forter's vision of combating and eliminating e-commerce fraud. For retailers and merchants, this is a huge and unsolved market opportunity as $200 billion in good sales are blocked or declined annually and an additional $70 billion is lost to fraudsters," Zielke said.
They will also allow Fortner to continue its development of its global fraud prevention platform, and to expand the company's expansion efforts in the United States.
"The new funding will be a driving force behind Forter’s continued rapid growth and overall expansion throughout the U.S. Helping completely remove the fear of fraud from e-commerce will enable retailers to capture more sales," said Zielke.
