Fraud prevention vendor Kount uses artificial intelligence to spot fraudulent transactions on ecommerce sites. The acquisition will accelerate Kount’s global reach.

Consumer credit reporting agency Equifax Inc. announced last week it would acquire fraud prevention vendor Kount Inc. for $640 million.

Kount’s tools to prevent fraudulent transactions use artificial intelligence and machine learning to verify if a transaction is legitimate. With the acquisition, Kount will now have a large data set of traditional offline identity fraud risk indicators to further fine-tune its fraud prevention algorithm.

“We are excited to be able to offer Kount solutions with an expansive set of Equifax data, analytics and products,” says Kount CEO Bradley Wiskirchen.

“The combination of Kount and Equifax will help our customers across vertical markets to establish strong digital identity trust behind each interaction while enabling new forms of online engagement with current and prospective customers,” he adds.

Kount will continue to be based in Boise, Idaho, and its employees will join Equifax’s United States Information Solutions business unit. The deal is expected to close in the first quarter of 2021.

Equifax has global reach, Wiskirchen says, and the acquisition will accelerate Kount’s international expansion. Currently, Kount provides service to more than 9,000 global brands, including several in the 2020 Digital Commerce 360 Top 500 such as Staples Inc. (No. 8), GNC Holdings Inc. (No. 285), PetSmart Inc. (No. 19) and U.S. Polo Assn. (No. 887).

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Running shoe retailer Brooks Running recently told Digital Commerce 360 about a fraud attack that Kount helped it identify and shut down.

The scheme was difficult to identify because the criminals created email addresses and then let them sit for at least two years—knowing that orders from newly created email addresses raise red flags. Then, the criminals used those emails to make purchases with stolen card numbers.

When shoppers complained to their credit card companies about the fraudulent transaction—and thus initiating a chargeback—Kount and Brooks Running fraud specialist Chad Funk went to work figuring out the scam.

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Chad Funk, fraud specialist, Brooks Running

Chad Funk, fraud specialist, Brooks Running

Kount works with Ekata, which tracks email addresses and other elements of personal identity, and could see that the email addresses
had been around long enough not to arouse suspicion. But Kount also spotted that the names in the email addresses, which often were in the format of [email protected], did not match the names associated with the billing and shipping address of the card being used.

“It was really easy to see it was fraud if you had your eyes on it,” Funk says. “Kount has a really good program to see how orders are linked together.”

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Once Funk understood the scheme, he was able to set rules to stop it. Funk says 15 or 20 fraudulent orders got through early on, costing the company a few thousand dollars, while Brooks successfully stopped about 100 fraud attempts using this scheme.

For Equifax, the acquisition will expand its fraud prevention data assets for its business.

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“Equifax is taking advantage of our strong 2020 outperformance and cash generation to make this strategic acquisition,” said Mark Begor, CEO of Equifax. “Our data and technology cloud investments allow us to quickly and aggressively integrate new data and analytics assets like Kount into our global capabilities and bring new market-leading products and solutions to our customers.”

Don Davis contributed to this article

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