Fraud costs e-commerce retailers billions each year, as do the rules-based fraud-detection systems they use to identify and block potential fraud. But you might be surprised to learn that the lion’s share of fraud-related losses come not from fraud itself, but from false-positives (i.e., accidentally blocked purchases that are perfectly valid).
The Berlin-based startup Fraugster estimates that for every dollars lost to fraud, $17 is lost from rejected sales. But with its fraud-detecting software, it believes it can bring this ratio down to 1-to-2. Its “Fraud Free” product, which it sells to payment companies, uses artificial intelligence (AI) technology to gather data from multiple sources, analyze it and cross-check it in the blink of an eye to determine whether a transaction is fraudulent – or, perhaps more importantly, not fraudulent.