With online banking and shopping at an all-time high during the holiday season, fraud is running rampant. Here’s how four Israeli firms are outsmarting the hackers.

RISKIFIED

As mentioned above, friendly fraud occurs when consumers dispute charges for something they received, rather than returning the item. Maybe their kid bought it without their knowledge or maybe it’s an impulse buy that they later regretted.

“When order information comes to Riskified in real time, we decide in a second or two whether to accept or reject the order, using sophisticated machine-learning models,” says Elad Cohen, Riskified’s VP of data science.

“We only get paid for the orders we accept. If we get it wrong, we pay the entire chargeback fee.”

Riskified’s service reduces fraud-related costs by as much as half, says Cohen. “Our fee is substantially lower than their chargeback fees and they don’t have to pay someone to do it inhouse.”

But the main benefit is that Riskified’s automated process increases order approval rates up to 20%. That’s because human risk assessors tend to err on the safe side, rejecting suspicious transactions or even blacklisting entire countries.

JUSTT

Justt is another Israeli startup helping global merchants fight false chargebacks with smart technology.

Founded in 2019 as AcroCharge, Justt uses machine learning and domain-specific technology to flag incorrect chargebacks and builds tailored solutions to gather and submit evidence on merchants’ behalf.

The company says its customized, fully automated approach defeats 85% of friendly fraud while eliminating the need for in-house chargeback mitigation programs.

Founded by Israeli tech industry veterans Roenen Ben-Ami and Ofir Tahor, Justt recently raised $70 million in funding as it expands, now encompassing about 110 employees.

One of Justt’s customers, digital payments giant Melio, reports that its mitigation team was able to reclaim about 30% of false chargebacks before implementing the automated solution. The success rate then increased threefold.

“Justt’s hands-off solution integrates with our card processor, allowing us to shift our focus from the never-ending task of fighting chargebacks to conquering our core business goals,” said Matana Soreff, Melio’s VP of risk and compliance. Justt’s customers pay a fee only after funds are recovered.

“The chargeback system is fundamentally unjust, but many merchants view their losses as simply the cost of doing business. At Justt, we believe there’s a better way, and that ecommerce sellers need someone in their corner as they navigate this archaic system,” said Tahor, Justt’s CEO.

BIOCATCH

Cybercriminals increasingly try to bilk the elderly out of their life savings, taking advantage of seniors’ lower level of digital savvy.

Using phone calls or text messages (to hide unfamiliar voices) pretending to be a grandchild in need of emergency cash, they may steal identity info to open a new account or persuade the victim to log into their bank account and then take it over.

After determining that 40% of confirmed fraudulent credit-card applications involved a person with a declared age of 60 or older, BioCatch recently launched its Age Analysis fraud-prevention solution for over 50 big financial institutions.

BioCatch was founded in 2011 based on military machine-learning technology to authenticate identities using behavioral biometrics — how you type, move the mouse or handle your smartphone. Even small differences in behavior suggest that a hacker, not the account holder, is at the keyboard.

“We don’t actively stop anything. We don’t tip off the bad guys. We collect the data invisibly and provide insights that allow the client to make a decision whether to approve, decline, or ask the applicant to contact customer support.”

BioCatch has more than 200 employees, with R&D in Israel and offices in North and South America, Europe, Asia and Australia.

IDENTIQ

Identiq was established in 2018 with the idea of creating a peer-to-peer network that allows merchants to validate the identities of new users.

“Let’s say you sign up for a ride-sharing service. They’re putting you in a car with a stranger and need to know that you are who you say you are,” explains CMO Shmuli Goldberg.

“Aside from the risks of credit card fraud, account takeover and identity theft, it’s also an issue of trust and safety. If you can be assured it’s a real person, a huge amount of the problems of fraud and bad actors go away,” says Goldberg.

“We do that by enabling our clients to verify your identity with companies that already know and trust you and have your IP address and credit card number, such as your video streaming service or grocery delivery company.”

Identiq’s algorithm-powered solution keeps user details anonymous and is both GDPR and CCPA (California Consumer Privacy Act) compliant.

“We use multiparty computation, a well-known branch of cryptography that makes sure we can run a computation on data we both have without either of us exposing that data to each other,” Goldberg tells ISRAEL21c.