Company that detects credit card fraud gets $11 million
Fraud Sciences, which has developed systems that cut down on credit card fraud, has received $11 million in a new round of funding, according to VentureBeat. The lead investor was Redpoint Ventures.
The company has devised what it calls the SpotLight transaction verification system, which essentially confirms that the customer trying to use a credit card number on a computer is the owner of the credit card. The system cuts down on fraudulent transactions, but also lets merchants accept transactions that seem to be a bit suspicious, but in fact are genuine (i.e. a husband on an international business trip uses a card in Asia, while his wife is making a transaction with the same joint account in San Francisco. It looks suspicious but it is legit. I know. This just happened, and it took a panicky phone call from me to get the card reactivated.)
The system relies on behavioral analytics and real-time fraud intelligence tools.
"If we approve a transaction that is ultimately found to be fraudulent, we will cover the full amount we approved. Period," the company's Web site says. The company lists a boatload of customers on its site. The guarantee goes to merchants who buy the services, but consumers benefit as well.
Although based in Palo Alto, Calif., the company comes out of Israel. The CTO held senior positions in the Israeli Defense Forces, which is sort of a finishing school for the security industry.
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