Fraud is not just something done out of a basement on the other side of the world anymore. Due to accelerated digitisation, online fraud has seen unprecedented growth, especially during and after the pandemic. As some people struggle to make ends meet, turning to a life of fraud where an unsuspecting victim they will never meet suffers the consequences, seems like the easy way to solve their problem. In a time where anyone is susceptible to online fraud, it is crucial everyone has the means to protect themselves.
Jimmy Fong serves as CCO at SEON, the fraud fighters. He has over 13 years within the online payments and fraud space as part of fraud tech pioneers CyberSource (acquired for $2billion by Visa), GlobalCollect (acquired by Ingenico for $1billion and latterly InAuth (acquired by American Express for $250million). His passion is mixing nerdy obsession over technology and hyper commercial growth.
Fong looks at how fraudsters are now sharing expertise, conducting training seminars and creating software tools with just as much expertise as the anti-fraud industry, and that if the public is not careful, by 2025 over $10.5trillion worth of damage could have been done as a result of fraud:
There are two basic facts that, while they’re not going to surprise anyone who would read The Fintech Times, still bear repeating.
The first is that more people are spending and managing money online than ever before. In 2020, while overall retail sales fell by 1.9%, eCommerce grew by 46%, its strongest growth for over a decade. It has been growing since the first ‘dotcom boom’ (and bust) of the late nineties, all the way back to the first-ever online sale (a Sting album.)
The second is that online fraud, and cybercrime in general, is also growing. It is expected to grow by 15% per year, causing as much as $10.5trillion in damage every year by 2025. It can affect literally anyone or anything that is online, from individuals to governments, and there are cybercrime groups making as much as any of the companies featured in this publication. The UK is coming to recognise fraud as a national security threat for the damage it does to the country’s reputation as a safe place to do business, even though every and any country can be affected by it. Criminals are sharing expertise, conducting training seminars and creating software tools with just as much expertise as the anti-fraud industry.
Neither trend started because of the recent pandemic, but both were accelerated hugely. More people than ever were unable to carry out everyday tasks that they have taken for granted, from paying a cheque into a bank to making a bet on the football or buying takeout, anywhere but online, leading to a generation of ‘digital debutantes’ who never engaged with the internet’s possibilities before. With a general economic downturn across the world, more people than ever are turning to crime to make ends meet, and cybercrime is an easy and relatively safe way to make money if you don’t care who is getting hurt.
As a company, we have known from before our founding that fraud was a problem that would only grow. We were co-founded by our CEO and COO, Tamás Kádár and Bence Jendruszák, during their time at university, when they were trying to found central and eastern Europe’s first dedicated cryptocurrency exchange but finding that the sheer quantity of fraud made this impossible. Like many companies before and since, they saw that they had two options.
The first was to go to legacy anti-fraud companies. Kádár and Jendruszák found that they couldn’t provide what they needed: although their technology was strong, they were slow to deploy new techniques, expensive, and often excluded ‘high risk’ companies working in fields like cryptocurrency. The second was to develop their own in-house solution – which would eventually become SEON.
We have found that more companies than ever are going on the same journey. Whereas once only the largest companies needed to worry about cybersecurity, with SMEs confident that they would fly under criminals’ radar, now any and every company that carries out any kind of transaction online needs to consider what kind of security they need. Few but the largest can develop their own bespoke, in-house solution as we did – it is costly, time-consuming and requires specialist knowledge that is in short supply. Those turning to the big names are finding, as Kádár and Jendruszák did, that many aren’t right for smaller, more specialist or just more innovative and agile companies. They are part of the macro move to adopting microservices – single specialised components that can be deployed to suit the complex needs of users today rather than monolithic, costly, all-encompassing platforms that take weeks or months to integrate before protecting users.
We have clients today that include cryptocurrency exchanges, iGaming operators, and major airlines (to name just a few). Though they are hugely varied, what unites them is the feeling that fraud-fighting needs to be accessible. It’s not enough for a handful of small companies to decide what their clients need, a problem as widespread and diverse as cybersecurity needs to be tackled in a way that considers the unique needs of the companies looking to reduce risk and manage costs.
So, while legacy companies tie their clients into long service-level contracts we do things differently: offer a month-by-month subscription with a 30-day evaluation period, similar to services that we’re all familiar with like Netflix and Spotify. Our API can be integrated into URL, Java, Python and PHP backend environments, allowing it to be integrated into almost any setup in a matter of seconds.
So many companies need to use anti-fraud technology that it is almost impossible to talk about our target audience or ideal customer. However, we have seen a common theme emerge: the need for companies to be able to carry our RiskOps, and to pay for it, on their own terms. Smaller companies, those deemed too ‘risky’ by legacy anti-fraud providers and larger companies with unique challenges all come to us because we understand them and can give them the protection that they need in a way that will work for them rather than tying them into one-size-fits-all solutions.
The fraud problem is likely to get worse before it gets better, dragging down every kind of company, from multinationals to start-ups, and cutting into the profits of every business that has a digital presence. That means that there should be a multiplicity of approaches, suitable for any type/size of company working at any level in any industry. That is what we provide, and it is why in the face of a worldwide crisis in digital fraud we are going from strength to strength with our customers.