×

Forter raises $32M to stop you being defrauded online

Forter, a start-up that uses a complex algorithm to help e-commerce sites detect fraud, has raised $32 million.

The Israeli firm, which was founded 3 years ago by former employees of the country's intelligence agency, is trying to tackle the rising problem of online card fraud in a world where it's easy to buy stolen financial details online.

Forter's software takes into account thousands of data points and analyzes user's behaviour as soon as they log on to an e-commerce site. It works using a combination of so-called machine learning and human know-how to recognize fraudulent trends. But because it is automated, the retailer doesn't have to do anything manually.

Previously an e-commerce platform would have to develop their own anti-fraud solution which could be expensive and could also block legitimate users.

"Every merchant needed to develop their own fraud prevention. They would review their own transactions manually. After all of that, retailers are losing billions of dollars," Michael Reitblat, chief executive of Forter, told CNBC by phone.

Reitblat said the software could make a decision in less than half a second. And the idea is that the algorithm gets smarter the more it is used.

The start-up claims to have generated 5 to 10 percent of sales increases last year for retailers using the Forter software.

623681619
Tek Image | Science Photo Library

But it's not the only start-up vying to take a lead in the anti-fraud space. Rival Riskified, which is also from Israel, raised $25 million earlier this year and also uses behavioural analytics to detect online fraud. Forter is also up against the likes of credit rating firm Experian which spent $324 million in 2013 to buy fraud protection start-up 41st Parameter.

Forter's main market is the U.S. and the company said it will continue to focus on large customers there as well as looking to expand internationally. Half of the $32 million will be put back into research and development with the company also looking to quickly acquire new customers.

"Last year we grew a little over 600 percent in terms of revenue and volumes. We expect similar growth this year. We are very aggressive on customer acquisitions.," Reitblat said.