Forter, an automated fraud detection platform for ecommerce, has raised $125 million in a series E round that values the company at over $1.3 billion.
The raise comes as ecommerce transactions surge under pandemic-driven lockdowns. But the throngs of people jumping online to shop have opened the floodgates to fraud. Recent data suggests digital fraud attacks have doubled in 2020, while the U.K. reported that financial fraud attempts rose by up to a third as the country entered lockdown.
Founded in 2013, New York-based Forter works with banks, online payment providers, and merchants to detect and prevent fraudulent transactions, spanning identity theft, account takeover, credit card fraud, and more. Forter’s platform is deployed between the user payment flow (i.e. the checkout process) and the payment processor and essentially approves or rejects transactions based on various signals.
For example, when a customer arrives on a website, Forter tracks their interactions, including what pages they visit and what they click on. Forter’s machine learning and behavioral analytics engine builds a picture of that customer and their intent, and when they go to make a purchase, Forter decides whether to flag the transaction as potentially fraudulent. This is why Forter has previously described its business as a “decision-as-a-service.”
“To make decisions on each ecommerce transaction, Forter processes 6,000 data points per decision and is able to leverage the behavioral analytics and user profiles of one of the largest datasets in the world,” Forter cofounder and CEO Michael Reitblat told VentureBeat.
Forter may also draw on indicators that the user is leveraging manipulation tools to hide or disguise their identity and previous interactions the individual has had with a site, including purchasing patterns.
“The uniqueness of the data collected by Forter provides deep insights into fraud trends and user interactions,” Reitblat added. “The data includes cyber intelligence, e.g. the user’s device and network, behavioral analytics, and proprietary detection attributes.”
To enable all of this, Forter has had to cultivate relationships across the commerce and payments landscape with players like Mastercard, Worldpay, FreedomPay, Salesforce, Shopify, and Adobe/Magento. Forter says its customers include Priceline, Delivery.com, Hugo Boss, and TGI Fridays.
Reitblat said Forter’s revenue has more than doubled in the past year and its headcount has also doubled to 255 employees across eight offices.
Online fraud is estimated to cost retailers at least $22 billion each year, a figure that is projected to hit nearly $50 billion within three years. While thwarting attacks is undoubtedly a priority for most sellers, it’s important that legitimate transactions aren’t caught in the crossfire, particularly when it comes to new users.
“The shift in consumer purchasing habits from in-store to online has accelerated, and for many merchants, the problem they face is that legitimate transactions from new shoppers are being declined,” Reitblat said. “Through Forter’s global network, we are able to accurately identify legitimate buyers from fraudsters. They may be new to a merchant site but not new to Forter’s network.”
If a new customer is rejected, they are unlikely to return to the ecommerce store in question, so it’s essential they be allowed to complete their transaction. Forter claims its platform helps customers reduce fraud by 60% — and false positives by 75%.
“New users are 5-7 times more likely to be declined simply because current merchant fraud prevention systems don’t have enough data on these users,” Reitblat added.
Forter had previously raised $100 million, and with another $125 million in the bank it is ready to expand its global network of merchants, banks, and payment providers. The company’s series E round was led by Bessemer Venture Partners, Felix Capital, and Itai Tsiddon, with participation from Sequoia Capital, Scale Venture Partners, NewView Capital, March Capital Partners, and Commerce Ventures.