A startup that uses AI to detect payment fraud, Fraugster
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We all know that fraud attacks are getting bigger and bigger each day, which results in great losses for a lot of good companies. About $16 billion is lost each year, and that is in e-commerce alone, which means that that is just the beginning. There are many solutions that are not programmed to fight stronger fraud attacks, on top of that, they block too many good customers, which is the result of their outdated technology.
The fact is that over $275 billion in revenues are lost yearly because the good customers are being blocked. Simply put, for every dollar that has been gained by fraud, the companies lose 17 good ones. This is where Fraugstar steps in, as they are a security payment that every company needs and every good company deserves. They invented their own artificial intelligence technology that will solve this problem.
How do they work? Well, with every transaction that is being sent to them will be overwhelmed with thousands of additional data points, which results in having a better insight on the behavior of the users. The best thing is that based on this knowledge, Fraugstar can be one step ahead of cyber criminals by being able to predict the fraudulence attacks before they even happen. Introducing themselves as the future of payment security, Fraugstar promises to help your company grow with less fraud.
This German and Israeli startup has developed an AI technology that will help you eliminate fraud, but they have also raised about $5 million in funding. Fraugstar, was founded in 2014 by Max Laemmie, who you might have heard about as he has previously co-founded Better Payment (payment gateway company), together with Chen Zamir who is known to have spent over a decade studying and working in risk management roles and different analytics including 5 years at PayPal.
In addition, Fraugstar has stated that it is already handling about $15 billion transactions for a couple of thousand payment service providers and international merchants, which also includes Visa. Their AI technology is made in a way to be able to learn something from each transaction in real-time after which it is able to predict when the fraudulence attack will happen before it actually does. If this is true, then Fraugstar is able to reduce fraud up to 70% as to simultaneously increases conversion rates by as much as 35%.
The co-founder Max Laemmle and the startup’s CEO have stated: "The reason why we founded Fraugstar is because the entire risk market is simply based on an outdated technology. The rule-based systems that exist today, together with the classical machine learning solutions are way too expensive for being too slow to adapt to an advanced fraud's new pattern in real-time. With our self-learning algorithm, the AI learns and is able to mimic the thought process of a human analyst, and with the capacity of the machine it is able to give new decisions in less than 15 milliseconds".