Signifyd Connecting Online and Offline Data to Detect Fraud

Signifyd's e-commerce fraud program analyzes 120 risk indicators, including public records, merchant blacklists, social graphs, and geolocation.

Setting up shop on the Internet comes with risks. Credit card fraud cost merchants and banks an estimated $3.5 billion last year. While online retailers spend about 1% of revenue on preventative measures, such efforts can introduce friction in the shopping process that often results in a decline of sales. To tackle these issues, Signifyd launched an e-commerce fraud program Wednesday, analyzing online and offline data to detect phony transactions.

Assessing 120 risk indicators—including public records, merchant blacklists, social graphs, geolocation, and device fingerprinting—Signifyd can flag fraudulent transactions in real time. "Good people leave footprints," cofounder and CEO Rajesh Ramanand told Fast Company. "What we try to do at Signifyd is connect the offline identity of a user and the online persona they claim to be."

One example Ramanand gives is when social and transactional data don't line up: If Signifyd notices a purchase originating from Ghana, but geolocation embedded in social media updates indicates the consumer is traveling in Australia, that transaction is likely fraudulent. "We can decide if the transaction is real or not. What are you doing online? What are you doing offline? Is there consistency? Is there reason why you're buying this?" he asked.

The company opened a public beta about six months ago, and its technology has been implemented by "hundreds of retailers"—from mom-and-pop shops to companies with billions in sales, said Ramanand, who previously served as PayPal's head of merchant risks in emerging markets. Merchants that have participated in Signifyd's beta have seen a 63% reduction in chargebacks, or disputed transactions where the losses are typically absorbed by merchants. Signifyd's service begins at $19 a month and scales based on volume. Smaller merchants can also use its one-click setup with e-commerce platforms, such as Shopify and Magento.

"If we say something is good and it ends up being a chargeback, we'll take the liability," Ramanand said. Not only that, but he added that retailers have also seen revenue increase 15% to 20% with Signifyd because they can increase the number of markets they're in without worrying about fraud.

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