My Merchant Account Blog

Fighting Fraud with ThreatMetrix

Wednesday, November 16, 2011

The online business world welcomed a very strong fraud prevention system for payment gateways when the cloud based ThreatMetrix Fraud Prevention Network was launched last year. As eecommerce spreads across a wide range of sectors, including social networks, financial services, affiliate marketing and the ever growing sector of online businesses, the market for preventing fraud is enormous and continues to grow. At the same time ThreatMetrix was entering an already crowded field of online fraud prevention systems.

As ecommerce grows by leaps and bounds so does online fraud paralleling that growth. In 2007 online businesses lost 3.6 billion dollars to fraud. Fraud from international transactions is more than 2.5 times that of domestic transactions. Over 73,000 malware threats are released every day. Most online businesses are using three or more fraud detection tools. All are looking for an exceptional fraud detection system.

So what makes ThreatMetrix different? It is designed to walk the fine line between customer convenience and business/customer security. Customers say these are the positives:

• ThreatMetrix Fraud Prevention Network goes beyond just protecting payment gateways to protecting online businesses and social media and new account originations, registrations and log ins.
• It does this without requiring any personally identifiable information (PPI).
• ThreatMetrix provides customizable fraud prevention by combining a variety of fraud prevention systems such as device detection, detection of botnets, scripts, VPNs and the origin of the devices, satellite dial up and mobile wireless detection.
• Customers can assign their own risk score for specific behavior occurring on their site. For instance if a retailer has a customer who visits their site five times in one day using five different email addresses, the retailer can score that behavior differently than another retailer might.
• Easy Integration between a customer’s back end software and ThreatMetrix’s global cloud based fraud prevention network. For most companies this is a matter of days instead of weeks or months.
• Cookieless fraud detection. This passive profiling is unique to ThreatMetrix and its real-time global system allows retailers to compare data received from a customer with data from hundreds of other retailers.
• Return on investment when purchasing ThreatMetrix is a matter of months not years.
• Stops first time fraud, recurring fraud and validates returning customers.

So many of ThreatMetrix’s customers report that they chose this system because is integrates payments, with logins and registrations. Because of this they no longer have to tie together a variety of products to meet their overall fraud prevention needs. ThreatMetrix allows its customers to get results in hours or days instead of weeks or months. So what are the components of the system and how do they actually work?

• Cookieless Device Identification: Cookies are no longer a reliable way to identify devices and prevent fraud. ThreatMetrix uses attribute matching and confidence scoring. They provide parallel matching across multiple cookie equivalents and cookie wiping, botnets, device manipulation and hidden proxies.
• No PII: Customers love this aspect of the system because their customers love it. ThreatMetrix uses data from the device along with the device’s internet connection and data from the transaction to determine its authenticity.
• First attempt fraud detection: Through its device and transaction data ThreatMetrix is stopping first attempt fraud in its tracks. Academics Direct reports an 80% reduction in first attempt fraud.
• ThreatMetrix accomplishes this in real time. The network evaluates hundreds of anonymous characteristics in real time and the end user never knows it.
• Shared Intelligence across a Global Network: This just may be the key to ThreatMetrix’s success and the fact that it is the fastest growing fraud prevention software. The information one customer receives is based on data from millions of transactions across ThreatMetrix’s customer base. The more customers they have the better this information becomes. It is in real time, always available and always current.
• Device Independent: ThreatMetrix does not care what device is being used - PC, tablet, Smartphone, it doesn’t matter.
• Customizable: Mentioned previously as a big customer favorite this aspect of the system allows the buyer to set it up the way they need it for their particular fraud risks. It also hides all this from the end user, instantly verifies previous visitors to the site and complements other anti-fraud tools.

Another example of the success of ThreatMetrix was in a joint venture with Telesign to reduce fraud on name.com. Here are the results:

• 10-12% fraud rate was reduced to 2%
• Lost revenue due to fraud was reduced by 98%
• Reduced $5000 loss per day to $1000
• Reduced the rate of manual review by 88% and reduced the needed Full Time Equivalent staff from 2.5 to .03 FTEs
• Reduced weekly charge backs by 80%

This success seems to be only one example of why the inline world is embracing ThreatMatrix at such a record breaking pace. This also seems to be particularly true in the mobile gaming market. Mobile gaming is one of the fastest growing ecommerce markets and ThreatMetrix seems to be well suited to corner it.

ThreatMetrix in Action

Gopro has been using ThreatMetrix for abtou twenty months.  In an interview with My Merchant Account Blog, Stephen from GoPro.com told us they had been extremely pleased with their services.  ThreatMetrix reduced friendly fraud by 15%, real fraud by 70%, and products not received by 15%. 

Like MaxMind, ThreatMetrix is compatible with all electronic payment gateways.  This was important to the company when reviewing other companies.  GoPro.com is not tied to any one processor or electronic payment gateway.

We would like to thank Stephen for take the time to answer some questions regarding ThreatMetrix.  If you are interesting in doing an interview, please contact us or call 888-928-5280 ext 822.