Signifyd, a fraud prevention vendor that works with 10,000 global retailers, has raised $100 million, bringing its total amount raised to $187 million.
The company will use the funds to fuel growth and expansion. Signifyd opened its first European office in April in Barcelona. The San Jose, California-based company plans to double its staff to 320 during the next year, co-founder and CEO Raj Ramanand said.
Like competitors Forter Inc., Riskified Ltd. and others, Signifyd’s software analyzes online transactions for fraud. It pulls in additional data, including the length of time an email address has been in use, the number of social media contacts connected to a potential customer and the type of device being used. It then uses that information to identify potential shysters and green-light ones that don’t fit a standard profile, but that Signifyd still deems as legitimate.
For example, one bicycle seller was declining roughly 30% of its transactions because the billing and shipping addresses didn’t match, Ramanand said. Upon further analysis of timing (almost all the purchases in question were made in August and September) and home values, Signifyd determined these were mostly parents purchasing bikes for their kids starting college. The company’s software approved the transactions and the bike shop recouped revenue, he said.
“We look at 1,000 different data points” to make a decision, Ramanand said, adding that it pays to access some and owns others.
Signifyd’s annual revenue in 2017 was around $75 million, a person with knowledge of the company said.
The series D round of funding is led by Premji Invest, with participation from existing investors Bain Capital Ventures, Menlo Ventures, American Express Ventures, IA Ventures, Allegis Cyber and Resolute Ventures.
Signifyd works with online retailers including Build.com, No. 68 in the Internet Retailer 2018 Top 1000, Jet.com (now a part of Walmart, No. 3) and Wayfair Inc. No. 13.
Fraud losses due to account takeover fraud increased 80% between 2016 and 2017, according to an analysis of billions of transactions over a two-year period by Signifyd for the vendor’s E-commerce Fraud Index. Fraud losses are defined as the percentage of total transactions identified as potentially fraudulent, including both successful fraud attempts and orders declined because of the suspicion of fraud.
Account takeover fraud occurs when criminals obtain log-in credentials and credit card information with social engineering, by hacking databases or by buying them in bulk on the Dark Web, which offers batches of credit card numbers.
The increase in account takeover is happening at a time when online fraud in general is on the rise. Signifyd’s fraud index data saw a 7% increase in online fraud losses overall, but the rise was not evenly distributed across retail verticals.
For instance, department stores, cosmetics and perfume sellers, and jewelry and luxury watch merchants were hit hardest by account takeover fraud losses, with increases ranging from 194% to 285%. At online jewelry sites, for example, account takeover fraudulent orders now represent 1.24% of all orders.
Overall, the increase in e-commerce fraud losses was hardest on cosmetic and perfume sellers, which had a 102% increase in 2017 from 2016, as the fraudulent orders accounted for more than 5% of orders in the vertical. The vertical collectively is somewhat more susceptible to fraud attacks because of new beauty retailers selling online, which tend to be more vulnerable targets than long-established players.
Department stores and jewelry and luxury watch merchants also experienced significant increases in overall e-commerce fraud losses, seeing their rates increase by 48% and 30%, respectively.
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