Kount Blog

White Paper, Industry Expert Validates Kount Solution

Mon, 02 Apr 2012 22:33:00 GMT

We obviously believe there is tremendous value when you fight fraud with a fully integrated solution instead of piecemealing different tools together that often don’t play nicely with one another. Now you no longer have to take just our word for it. Mercator Advisory Group recently released its Card-Not-Present Risk Management Across the Value Chain report, which reinforces (among other key findings) the need for any business operating in a card-not-present environment to have a comprehensive, real-time fraud solution. We couldn’t agree more.

Mercator is an expert resource for companies involved in the banking and the consumer payments industries. We believe they provide valuable perspective on the impacts of fraud and the protection every business needs to minimize risk in card-not-present environments. If your business operates in a card-not-present environment, the Card-Not-Present Risk Management Across the Value Chain is definitely worth a read. The report includes findings consistent with our experiences, although the analysis was conducted and produced independently of Kount.

Notable highlights of the report illustrate the ongoing evolution of fraud among other key findings:

Web‐based card‐not‐present (CNP) payment transactions continue to grow at a remarkable rate
New lines of CNP (and mobile) business enabled by e‐commerce have revised the criteria for evaluating fraud management tools
Today’s fraud detection systems must accommodate a widening set of channels and payment methods
An integrated approach to fraud management creates a better solution by interlocking defenses that add clarity and decisioning speed

Mercator notes that while new lines of business continue to evolve, so does fraud and the need for one comprehensive integrated solution. We believe Kount Complete™ is that solution, capturing the deep tool integration for risk detection and the strong, interlocked defense mentioned throughout the report as the best option for businesses to combat fraud today. It also reflects the benefits of using a single provider with integrated tools to minimize risk in every transaction.

Kount started as an integrated fraud solution based on the evolving needs of e-commerce. Today that need is stronger than ever. Just ask an industry expert.

Micro Center Chooses Kount to Power its e-Commerce

Mon, 26 Mar 2012 13:58:00 GMT

Micro Center Computers and Electronics shared the news earlier this month that it has selected Kount Complete™ to power its fraud reduction strategy. While Micro Center is an experienced bricks-and-mortar computer and consumer electronics retailer, it is rapidly becoming an emerging force in the e-commerce realm. Their growth in this side of their business is nothing short of impressive. Micro Center also has an expert reputation among its customers, selling more computer-related items (more than 30,000 in stock) than any other computer retailer.

Like many companies experiencing growth and moving into new markets, products or payment methods, Micro Center wants to maximize the protection of both the company and its customers. While many consider the primary impacts of fraud to be lost product, damaged customer relations, wasted time and expenses such as chargebacks and other financial burdens there is an often neglected but serious impact – sales. Companies often avoid markets, countries or regions with higher levels of fraud when they could simply leverage solutions like Kount Complete to analyze their e-commerce process before, during and after each transaction so they can continue to sell their products and services around the globe. Put even more simply, Kount helps minimize your fraud risk so you can sell more products to more people in more places.

Digging a bit deeper into the process, Kount’s “decisioning” engine analyzes hundreds of relevant variables and activity across the globe in real-time, applies rules based on the merchant’s specific needs, then delivers a highly predictive risk assessment in an average of just 350 milliseconds. The process gives our customers greater visibility into fraudulent activities while dramatically reducing the need for costly and time-consuming manual review. It is also so incredibly quick that your customers will not notice any lag time whatsoever.

But don’t take our word for it, feel free to shop at Micro Center and see if you notice any delay when you check out. Rumor has it our analytics are faster than a 90mph fastball.

Kount Solution Nominated by Peers

Fri, 23 Mar 2012 17:42:00 GMT

At Kount, we love to hear from our customers like Busted Tees and how our fraud solutions allow them to do more business in more places with less risk. But we were truly humbled when we learned of our nomination for the Best Overall Fraud Security Solution among our peers in CardnotPresent.com’s inaugural CNP Awards. (Did we mention voting lasts until March 30?)

The winner will be announced during the premiere 2012 CNP Expo May 20 -22 in Lake Buena Vista, Florida and we hope to see you there. The expo is an inclusive industry-wide event that combines education, buying and selling opportunities and organized networking focused on ecommerce and customer- or card-card-not-present transactions. We also look forward to the frank dialogue about the issues facing our industry as CNP Expo Founder Steve Casco speaks to here.

The awards were established to recognize the companies, programs and solutions that have distinguished themselves in the card-not-present space during the past year. While we take great pride in developing and evolving our fraud solutions, it is validating to be nominated by peers in our space and seen as a thought leader in the industry.

Kount will have a team on site at the CNP Expo and we look forward to talking more about the issues facing our industry so we can continue to evolve the card-not-present space together. Until then, we hope you vote and make your voice heard at http://www.cardnotpresent.com/cnpawards/. Voting for the award is open until Friday, March 30.

Growth, Momentum in 2011 Show No Signs of Slowing in 2012

Fri, 27 Jan 2012 21:32:00 GMT

Once the calendar flips to the new year the opportunities ahead of us often take a back seat to the achievements behind us. At Kount, we have great expectations for 2012 primarily because of the record-breaking progress we made last year in adding customers, growing our business, setting the pace for our industry and adding a number of enhancements to our fraud-fighting platform.

Strategic Partnerships

Obviously our success begins and ends with the customers and partners who use our platform to minimize risk and increase sales. Those who joined us in 2011 span 11 key industries ranging from digital and physical e-commerce to gaming, telecommunications and insurance. These industry leaders include:

Lime Light CRM, the most trusted CRM provider in the online markets
Lexis Nexis, global provider of content-enabled workflow solutions
Vindicia, a leading provider of SaaS billing solutions
Polk Audio, a world leader and award-winning designer and manufacturer of high performance audio products
Zoovy, the leader in success driven e-commerce software for online businesses
Magento, developer of the world’s fastest-growing eCommerce platform

Company Growth

Adding these partnerships set the pace for one of our best years ever. We more than tripled our customer base and increased annual sales by 364%. As customers increased and sales grew, we also expanded our global reach. At the end of 2011 Kount was helping its customers extend risk analysis data monitoring to more than 180 countries across the globe.

Industry Leadership & Influence

While Kount's fully-owned and integrated platform is not a new development, the uniqueness of our solution and the fact that we pioneered numerous aspects of the fraud tools in use today was further reinforced in 2011. Kount received four patent allowances last year alone, bringing our total number to thirteen pending patent applications related to fraud prevention and detection technologies. This includes system identification, data collection, credential verification, payment fraud control and risk analysis with more applications set to be filed in early 2012. Here are the specific patent milestones for 2011:

U.S. patent number 13,096,673 “Establishing Unique Sessions For DNS Subscribers” – Paves the way for using characteristics of Domain Name Service (DNS) protocols to secure access to content on the Internet.
U.S. patent number 8,024,266 “Method for Secure, Closed-Loop Money Transfer Via Electronic Mail” - Enabling secure money transfers over the Internet via email, adding an additional eight claims to bolster several other Kount patents in the security and fraud prevention space.
U.S. patent number 7,958,246 “Establishing Unique Sessions for DNS Subscribers” – Related to device fingerprinting, involving uniquely identifying a set of services linked to a specific device through its use of the Domain Naming Service (DNS) – a completely new way to identify and track activity not easily manipulated, blocked or masked by the user.
U.S. patent number 7,937,467 “Online Machine Data Collection and Archiving Process” - Describes the generation and analysis of a machine data profile of a customer computer accessing a merchant website. In addition to creating a device fingerprint, the technology “pierces” through anonymizing proxies to detect the true IP address and geolocation of the customer computer. The technology also links the customer identity profile with other online transactions looking for suspicious or otherwise fraudulent activity across a large number of transaction attempts, all in real-time.

Additionally, Kount and its leadership team gained regional and national recognition for its influence at industry conferences and through high level appointments.

Kount showcased its industry-leading platform at the MRC 2011 Annual Conference, highlighting the industry’s only money back guarantee for those merchants in the excessive chargeback program
We were recognized as a key sponsor of the prestigious MasterCard Academy of Risk Management (ARM) Conference in San Diego
Our team discussed the latest innovations in fraud and risk strategies with international merchants in Barcelona during the second annual European e-Commerce Payments and Risk Conference by Merchant Risk Council (MRC)
The Federal Reserve Bank of San Francisco named Kount CEO Brad Wiskirchen as the new Director of its Salt Lake City Branch, effective January 1, 2011
Already a founding member of the Idaho Technology Council, Vice President of IT Operations Rich Stuppy was appointed as its Vice Chairman
Kount Marketing Director Don Bush was recently appointed to lead the Communications Committee of the Merchant Risk Council

Platform Enhancements

Last but definitely not least, we continued to extend the functionality of our risk management and fraud-fighting solution. We enhanced features across each of our platform’s core components with Kount Complete® Platform version 4.4, including Strategy Management, Operational Management and Fraud Screening. We also developed an enterprise fraud solution to meet the needs of small to medium sized businesses called Kount SMB™, which is now available through a network of channel partners.

Clearly 2011 was an exciting year for Kount, but we're just getting started. Be sure to keep tabs on our latest announcements here and look for exciting initiatives throughout the year such as our free device identification and other developments. Above all, we hope you and your company achieve all of your 2012 goals and that you think of Kount when it comes to boosting sales and beating fraud.

Fraud Moves Fast, Does Your Fraud Solution?

Thu, 08 Dec 2011 14:57:00 GMT

I recently attended a webinar presentation by one of my competitors that was shocking to me. The whole premise of the presentation was how well their fraud system worked and how much fraud it prevented.

So far, so good.

Then they started to outline the process of integration and implementation. The presenter said that due to the cost associated with the implementation of the system, the customer chose to implement it over a period of TWO YEARS!

I cannot imagine a solution today that is so complex and costly to set up for a customer that it takes two years to complete. Simply put, this translates into two years of suboptimal fraud protection, two years of vulnerability, two years of additional losses due to fraud, two years before I start to see any ROI. According to some industry experts, a company could build their own fraud solution if given two years time.

Fraud changes too quickly and hits merchants too hard to wait two years for an effective solution.

We have a customer that was being deluged by fraud from criminal networks and fraudsters out of Cuba and Vietnam. They were losing nearly $1 million dollars a month. They were being fined by the card brands to the tune $100,000 a month. If they waited two years to have a fully implemented system, they would have long been out of business. We had them out of trouble in 30 days and fully optimized in less than 90.

Another merchant was using a service that was so unreliable that 30 percent of the orders sent for review “timed out” before they could tell if it was a good order or a bad order. If you can’t determine, in real-time, whether an order is good or not, your customers will notice the disruption and look elsewhere to buy.

If you have a fraud problem and your solution doesn’t move faster than the fraudsters, call me.

Beat Fraud, Boost Sales™

Wed, 05 Oct 2011 21:49:00 GMT

Over the past several months I have seen a trend that is a bit concerning. As I meet with merchants and talk to them about their fraud issues, many of them tell me, “We don’t have a fraud problem.” When I dig a little deeper into the strategies and tactics they use to manage fraud it becomes quickly apparent that they do indeed have a fraud problem but have used several “patches” that cover up the symptoms and result in lower sales.

One merchant was having a terrible time with affiliate related fraud, so they simply took a hatchet to the program and turned it off. They cut off an entire sales channel because of fraud.

Another merchant was manually reviewing more than 15 percent of their orders and was wondering if they would be allowed to hire more fraud agents to handle the expected growth in the coming months. This means slower review times, customer dissatisfaction and lower sales.

Yet another merchant was actually running with two different merchant accounts so they could mask their actual chargeback rate. Hiding the problem doesn’t make it go away. In fact, sooner or later it will be bigger and more urgent and could result in fines and lower profits.

I find these types of draconian fraud prevention methods all too often. From turning off IP addresses for entire countries to declining good orders because of fraud suspicions, merchants are losing out on two percent to as much as eight percent of top line revenue and bottom line profits because their fraud management strategy and tools are not keeping up with fraudsters.

Proper fraud management allows merchants to accept more orders, expand into new markets, channels and geographies and still maintain low chargeback and false positive rates. If you are having trouble maintaining or growing sales, maybe a good place to start looking is your fraud prevention techniques. You might just be surprised at what you find.

For more information about the Kount Fraud Platform, contact Kount today. View the 2-minute video, BeatFraud, Boost Sales™

Going Mobile? So is Fraud

Tue, 16 Aug 2011 20:19:00 GMT

The following is taken from a recent interview of Kount conducted by Retail Info News Magazine concerning the rise of mobile commerce and how merchants can protect themselves and still take advantage of the growth opportunities.

What are today’s biggest challenges for retailers in terms of securing their digital transactions?

Over the past couple of decades, fraudsters have evolved into a sophisticated network of criminals that have increased the speed of fraud and the size of their impact. Merchants that work in card-not-present (CNP) environments can no longer just throw tools at the problem, they need a dynamic, comprehensive, platform-type solution that responds in real-time, sub one second, to stop fraudulent transactions and not interrupt the consumers buying experience. The solution must be multi-layered and work with credit cards, mobile and other alternate payment types.

What additional security/fraud prevention challenges do mobile transactions present?

Unlike other forms of payment, mobile introduces many new elements that complicate the user verification process. For instance, mobile phones can be rented or pay-by-the-minute phones purchased, SIM cards can be modified and in many cases mobile devices do not require a standard payment credential or verification that the right user is making the purchase. Stolen mobile devices are as vulnerable as stolen credit cards or other forms of identification. Consumers are buying more digitally delivered goods such as apps, content and virtual goods, which are downloaded instantly and they expect immediate approvals. Fraud checks must be as fast or faster than the payment approval and more accurate than ever.

Which best practices used in online fraud prevention can most profitably be applied to the mobile space?

The issue really is that it doesn’t make sense, either fiscally or operationally, to have different solutions for online and mobile fraud. The best overall strategy and most cost-effective practices in use today detect and prevent fraud through operational or platform solutions that look at fraud in a complete and comprehensive way and management it as single system. A good fraud prevention strategy looks at all channels and payment types and manages a rules, or decision engine, to the business conditions. Otherwise, merchants are always patching holes as new methods of fraud evolve.

Can retailers take a similar approach to fraud prevention for their own mobile devices and for transactions with consumers’ mobile devices? Are there advantages to taking a common approach?

We look at fraud as fraud, no matter where it is being committed, on any device by anyone. On a platform like ours, it would be very simple to create rules based on in-store devices or purchases that have a slightly different set of criteria than for consumers’ transactions off premises on other devices. Again, one fraud strategy, multiple ways to engage it based on the business.

Which technologies/processes have proven themselves in the area of digital fraud prevention?

There are lots of good technology tools on the market today. None of them are an answer by themselves and few are integrated into a platform, the best way to layer fraud protection. In the digital goods space speed and accuracy are critical factors combined with a complete set of tools such as, device identification, geolocation, IP detection and IP proxy piercing, multi-merchant order linking, velocity checks, affiliate management and a comprehensive risk score that analyzes the hundreds of variables reviewed by these tools. A robust rules or decision engine can really make a huge difference in maintaining a solid fraud prevention strategy.

Boosting Sales Through Better Fraud Management

Tue, 28 Jun 2011 02:43:00 GMT

What is more important, increasing revenue or reducing fraud losses?

At a recent conference I attended I heard someone say, “We can’t expand into that area, the fraud would kill us.” I asked him the same question, what is more important, increasing sales or reducing fraud losses? He said that he was afraid of going into certain known high-fraud areas because it would jeopardize his overall merchant account status, increasing chargebacks and other fraud related losses. He didn’t think it was worth it.

I don’t believe this guy was alone in his thinking. Consultants I talk to tell me that many merchants turn off IP addresses or whole countries from their system not allowing any purchases to take place. That seems like taking a butcher’s approach when a surgeon is what is really needed.

Proper fraud management can help companies increase sales by:

Allowing them to accept more orders
Expanding into markets or geographies with confidence
Reducing rejection rates of suspect transactions

The truth of the matter is, the 2010 CyberSource Fraud Survey showed that the average U.S. merchant turns down 2.7% of orders due to suspicion of fraud. Internationally, the number almost triples to 7.8% of orders. Merchants spend millions of dollars every year in marketing, SEO and converting visitors to buyers only to reject a substantial percentage of orders at the shopping cart/checkout point in the buying cycle.

How do you turn a fraud department into a revenue-positive department rather than a cost center? Reduce the number of rejected good orders. If your team could cut the number of rejected orders in half, that would be an enormous step toward corporate sales goals and the cost is easy to show ROI.

What if you could open new geographies because your fraud solution was just as effective in South America or Africa as it is in the U.S.? The Wall Street Journal reported just a few weeks ago that most CFOs are looking to expand into new markets as a way to grow their businesses.

The Internet is a global marketplace. Stop reducing your ability to take advantage of global market because your fraud solution doesn’t work well enough.

Have you beaten fraud and increased sales at the same time? Tell me about, email me at don.bush@kount.com.

New Trend Shows Merchants Looking to Outsource Fraud Protection Services

Tue, 28 Jun 2011 02:36:00 GMT

As fraud has evolved over the last couple of decades, so have merchants’ attempts to combat its ill effects. The economy has caused everyone to reexamine business models and revenue streams, and many merchants are turning to service providers to help them keep ahead of fraud.

Fraud is moving at an alarming rate, a 22% to 38% annual increase depending on which study you read. Fraudsters are more sophisticated and better networked than ever before and work at lightning speed. They are a global force that never really goes away. They just change methods, tactics and merchants until they find a weakness, then exploit it as long as they can.

Let’s see if we can illustrate how this method of fraud prevention has worked.

Fraudsters find a new way to steal from merchants.
Merchants, payment service providers, consultants, analysts, etc. discover the new tactic used by fraudsters.
The industry responds by developing a new tool or technique that tries to offset the fraudsters tactics.
Rinse and repeat.

The trouble is that the tools used to combat these frauds tactics don’t always work well together. As merchants try to bring on new fraud tools to add to their homegrown solution they become the integrator, the developer of their proprietary solution. They build, maintain, upgrade and manage the fraud system in-house. In essence, they become the Fraud Prevention Department taking precious resources from other revenue generating activities.

Most merchants didn’t go into business to become fraud experts. They wanted to sell shoes, books, games or something else they were passionate about. Fraud prevention has become a necessary evil they deal with everyday. And if they have a homegrown fraud solution built in-house, the cost in time, headcount and resources can be startling.

The trend I have seen recently is merchants that once wanted to manage everything internally are finding better, faster and less expensive ways to manage fraud and minimize losses. I see merchants getting out of the fraud business and letting the experts manage it, letting them focus on new products, new markets and new ways to grow.

Let me know what you think. Email me at don.bush@kount.com.

Common Sense Prevails in Washington as “Do Not Track” Legislation Makes Room for Fraud Detection

Tue, 28 Jun 2011 02:33:00 GMT

Late last year legislation was proposed to the US Congress and in the California Legislature that could open the floodgates for criminals everywhere and greatly diminish the fraud fighting efforts of online merchants.

If you haven’t heard about it, I’m referring to two pieces of legislation, “Do Not Track Me Online Act of 2011 (H.R. 654),” introduced by U.S. Representative Jackie Speier and SB 761, introduced by California State Senator Alan Lowenthal under California’s Computer Spyware Act.

They sound a lot like the familiar “Do Not Call” legislation passed several years ago, minimizing the annoying telephone solicitors that seemed to interrupt dinner each night. While Do Not Track proposals may be well intentioned, they could have ramifications that far outweigh any benefit gained.

Essentially, the proposed bills would allow consumers to opt out and be placed on a national or statewide “Do Not Track” list, making any violation by merchants, businesses or other entities a criminal offense. Sounds really good, right? Who wants to be tracked? Too “big brother” isn’t it?

Unfortunately, if consumers can turn off tracking, so can fraudsters.

Fraud costs companies billions of dollars each year, and those costs are rising at an alarming 22% annual rate. When fraudsters use stolen credit cards and other credentials to make purchases online, merchants absorb the costs. They suffer losses through unrecoverable product, chargeback fees assessed by banks, ancillary costs such as shipping, operational costs, as well as the loss of confidence with individual customers and the overall brand.

From a consumer’s perspective, fraud prevention protects the public by making it more challenging for fraudsters to use stolen credit information. This helps keep prices lower and protects consumers from the costly and time-consuming damage of identity theft.

Device identification is one of the most powerful tools we have in the fight against fraud. It’s part of the Kount Platform and works to alert merchants to the possibility of fraud. Take it away and fraud rates would undoubtedly rise.

It seems as though we may have dodged a bullet in Washington. Wording changes on H.R.654 make room for fraud detection, although the legislation is still under development. California, however, has not modified their version of the bill. Imagine the chaos if SB 761 were to pass in California the way it is currently proposed. Fraudsters would have a new home.

We’ll be tracking them to see if they allow us to keep tracking the bad guys online.