Kount, a digital fraud prevention and identity trust platform, is partnering with Visa’s Verifi to provide real-time chargeback prevention solutions.

Verifi, a Visa Solution, offers several key features that help businesses prevent drastic money loss caused by fraudulent transactions. Most notably, these features will allow businesses to manage transaction disputes at the pre-dispute stage, therefore preventing premature and invalid chargebacks, provide dispute and fraud notifications and resolve Visa bank disputes in real time with enhanced AI tools.

“Individually, we have powerful and unique fraud and chargeback prevention solutions, and by combining our solutions and adding Visa’s global scale, we can provide the entire payments ecosystem with greater data visibility, faster dispute prevention and enhanced payment protection,” said Gabe McGloin, VP International Business Development at Verifi.

What is Friendly Fraud?

According to the Kount website, friendly fraud is “when a consumer makes an online purchase with their credit card and then disputes the charges with the issuing bank rather than requesting exchanges or refunds.” Friendly fraud is particularly hard to catch and prevent because it’s difficult to distinguish among other types of disputes, such as criminal fraud and legitimate disputes.

If unchecked, friendly fraud can have drastic effects on businesses, including loss of revenue, loss of goods, penalty fees and placement on banks’ chargeback monitor lists. Online retailers were set to lose around $4.8 billion over friendly fraud in 2016, and the frequency of friendly fraud is only increasing, with chargebacks increasing 60% between 2016 and 2017.

Friction vs. Fraud

Kount recognizes the potential outsized impact friendly fraud can have on growing businesses, and have worked for over a decade to provide digital fraud prevention solutions to over 9,000 e-commerce companies. They are aware of how consumers approach e-commerce, hoping to strike just the right balance between reducing friction—not having excessively stringent and involved security processes—while maximizing fraud prevention.

The partnership between Kount and Verifi comes right before what is expected to be a hectic holiday season for online shopping. “You know, with the COVID acceleration, a lot of businesses became digital businesses. And for the first time, a lot of them have been doing it, but they have new business models and they’re looking at this holiday season as sort of like the Superbowl of their existence,” said Gary Sevounts, Chief Marketing Officer at Kount.

More and more people are moving online to buy and sell goods, especially small businesses and older people, who have historically been hesitant to transition to the digital realm. The pandemic has effectively changed that, however, with Shopify reporting a 53% increase in people creating e-commerce sites between March and April.

With more and more transactions moving online, Kount utilizes AI to parse through this influx of data points and boost their fraud prevention technologies. “Because we have such a big customer base, because we have visibility into digital interactions such as purchases, logins, account creation, and so on, we have built the largest and richest data network of identity trust signals… You can think about that as a combination of payment data, device data, digital data and location data.” Their AI technology is capable of evaluating up to 2.7 billion fraud and trust signals per interaction to determine the level of digital trust within 300 milliseconds.

“Generally how it works is, whenever you press that ‘submit’ button on the website in a purchase, the system does its scoring, runs its rules and tries to figure out if this is a good customer. And at that very instant, if it’s a yes, the transaction goes through. But on the flip side, can you trust that person? Is that the person you think you’re dealing with?” said Scott Adams, the newly-appointed Vice President of Friendly Fraud at Kount.

With the COVID-19 pandemic looking to stay well into the next couple of months, it is more important than ever to protect both consumers and businesses during what’s bound to be a busy online shopping season.

ABOUT THE WRITER:

Lydia You is a computer scientist from Princeton University living in New York City. She is a Tech Innovation Fellow at Identity Review covering the intersection of technology, internet culture and the future of digital media.