Forter, a leader in e-commerce fraud prevention recently published a blog that looked at loyalty programmes from a security point of view. Enterprise Times spoke to Aaron Begner about the company, the blog and the recently launched the Forter Loyalty Protection Program.
Who are Forter?
Begner answered this saying: “Forter is a fraud solution founded in 2013, built with a focus on technology to answer the question for ecommerce retailers. ‘How do I resolve the conflict between providing a seamless customer centric experience, with the challenge of growing risk in the ecommerce space?’
“Forter created a technology platform that provides real time fraud decisions for the entire portfolio of transactions in a completely automated format. It combines the best of machine learning and harnessing data and behavioural considerations effectively. It combines that with a team of fraud experts based in our R&D centre. They are responsible to optimise the machine learning for each of the merchants that we deal with. We offer a combination of a highly customised model on a per merchant basis. Together with access to the insights from across our entire portfolio which processes 150 billion dollars worth of transactions a year. It is very highly enterprise focused.”
Who uses Forter?
Forter works with some of the largest retailers in the world. These include brands such as Priceline.com, Fraser Hart and Nordstrom.com. It has a global presence operating in North America, EMEA and Asia. Forter does not appear to partner with any ERP vendor, ET asked Begner how it operates.
“Every enterprise organisation has their own architecture. Even if they’re on a standard platform, they may have a high number of customizations. We take our data directly from the merchants. The advantage of that for the merchant, at least on the payments side is that they can make changes without it necessarily impacting the ability of Forter to perform and to deliver the service. As a product of the enterprise piece, we do tend to be focused more on direct integration. But we have cartridges for a number of the smaller ecommerce platforms, and we are building out what we’re doing on the partnership side.”
How does the Forter platform work?
Begner commented: “We collect checkout transaction data from the merchant. We add to that behavioural data to understand what the user is doing on the site. That might relate to their activities on the site, what they do on each page, what they put into and take out of the basket. We combine that with data about the device and operating system they are using. Trying to get a picture of the story they’re trying to tell about who they are, and whether the data supports that story.
“We have our own machine learning model that is processing this data and leveraging the full extent and capabilities of our network. From the $150 billion of transactions we process a year, we’ve seen more than 600 million unique users. Depending on the region, we see a significant majority of users that may be operating in e-commerce in any given region. Through soft linking we can really leverage that network data. Who have we seen? How can we use reputation effectively? What can we learn about users on the site, their persona and their identity?
“We make sure that we are recognising fraudsters who are returning with completely new data. Equally, we recognise legitimate users who are now returning with data adjustments. This gives the good guys the best kind of experience that is seamless every time. It’s a whole mix of things.
“The business is structured with different teams within our R&D centre focused on doing different things. We need to make sure we deliver very high KPIs. We do this by optimising across our technical organisation for different things. Having teams looking at the dark web and understanding what fraudsters are doing. What are the new MOs? What are they saying about our merchants or comparable merchants, for example.”
How do customers benefit?
“What we do for our merchants is look at every touch point the customer has with their site. By doing that, we’re able to make decisions at every touch point as to whether there’s a risk exposure or a change in risk. We can offer a number of different kinds of solutions. We can offer a decision at login. Is this account the exposed to an account takeover? Is the person trying to access an account the actual account owner?
“The second is sign up. For someone trying to create a new account is this a legitimate person or is it someone who already has an account on your network? We provide notifications or a request for step up authentication where required but in an optimised way. Then we can provide at the point of transaction an actual decision; is something a fraudulent transaction or not. That can relate to policy abuse. There are different kinds of loyalty fraud and they can range from someone who is trying to take over an account, redeem points or transfer points.”
These decisions are made in hundreds of milliseconds according to Begner which means that customer experience is not compromised. During the process. This is achieved through APIs between the ecommerce solution and the Forter platform.
Addressing the risk that loyalty programs can bring
The blog looks at the rich pickings that loyalty programs can provide cybercriminals. It highlights how loyalty programs are used by criminals, legitimate customers and employees in ways that companies did not originally intend. It notes that attacks on loyalty programs increased by 89% year over year in Q1 2019 (Source Forter’s 7th Fraud Attack index).
There are rich pickings, with $160 billion tied up in loyalty programs alone. The blog highlights the different ways in which the three parties can take advantage of programs, some more legitimate than others. It recommends that companies need to pay more attention to how they manage these programs. This includes using compliance and analytics to identify potential leakage. The risks? Data breaches can lead to significant fines and stolen credentials can lead to a loss of customers money. In turn, this leads to a drop in brand loyalty. This is the opposite of what a loyalty program is intended for when created. It was to address some of these challenges that Forter launched its Loyalty Program Protection solution onto the market.
Michael Reitblat, CEO and Co-Founder of Forter commented: “The combination of consumers not paying attention to their accounts and merchant lack of preparation is a big reason fraudsters find loyalty and rewards programs so alluring. It is clear that loyalty program accounts are low hanging fruit for fraudsters. Loyalty program points are a currency as valuable and untraceable as cash, and fraudulent activity in these accounts causes damage to brand reputation and monetary losses to merchants and consumers alike.”
What is Forter doing?
Forter is expanding steadily, fuelled by the $50 million funding round led by March Capital Partners in 2018. ET asked Begner what he hopes to achieve in 2020. He said: “We just released the loyalty solution. This a general reflection of new kinds of risks that are approaching the market and Europe particularly. In relation to PSD2 the expectation is that there may be a shift away from payment fraud.
“Our goal is to continue growing the global network and the ecosystem that we’ve developed internationally. To provide solutions to merchants that are customised and reflect a new kind of attack that they’re experiencing, whether it’s loyalty or whether it’s new exposure to the account. Then optimising flows that they’re going to have to implement in relation to regulatory development.”
Begner also explained his approach to expansion in Europe adding: “We are focused on the global 200 Enterprise accounts as our core target base. That’s something we hope to see grow over the course of the next 12 months. We would like to see the double digit growth that we’ve experienced year on year for several years continue this year. We probably do more in the UK, than across the rest of Europe. We are moving more aggressively into France, Germany and Italy. Trying to access and develop relationships with enterprises across those regions. We had a good year with that last year, and we’re looking to continue that activity into 2020.”
And where are the challenges?
Begner answered: “To keep up with the fraudsters, they are becoming more sophisticated. They are becoming more organised. The process of automating fraud is much easier than it used to be. You can go onto the dark web and buy usernames. I believe there is a statistic that says there were 3800 data breaches in the first half of 2019 which exposed 4 billion+ records alone. It’s something where there is more exposure and fraudsters are becoming wiser, in how to manage that. The burden of Forter is to make sure that we are developing our technology and staying ahead of that.”
Enterprise Times: What does this mean
This interview was carried out before COVID-19 struck. However, if anything loyalty is even more relevant today with more people relying on eCommerce and home delivery than retail stores. Companies cannot afford to lose brand reputation or money at this time. On the other hand investing in new systems needs careful consideration when cash flow management is critical to staying in business.
Reitblat concluded “Merchants need to fight fraud together. Forter’s Loyalty Program protection solution gives merchants the only fully integrated fraud protection platform that protects 100% of the customer journey, not only at the point of transaction. Powered by a coalition of the biggest enterprises and designed by the world’s foremost experts, only Forter can provide the intelligence needed to stop fraudsters in real time and enable the best consumer experience.”
This could be a tough year for Forter like many others but it could also see the company grow significantly.