SEON says anonymity is making financial crime harder to fight

By Sunniva Kolostyak

The digital anonymity movement, alongside data breach fatigue, is making the fight against online fraudsters harder, according to anti-fraud solution provider SEON.

In an interview with IBS Intelligence, Tamas Kadar and Bence Jendruszak, the founders of SEON, explained that as people are adopting VPNs, they are leaving behind less data to help anti-fraud companies fight financial crime.

Jendruszak, the company’s COO, explained that people are becoming more and more aware of where their information is, due to GDPR, and are adopting VPN usage to protect their information and leave fewer breadcrumbs behind.

“Meanwhile, the less you know about a specific person, when they transact, when they register, when they pay online, the harder it is to actually be able to associate risk to that specific user and transaction,” he said.

Kadar, CEO of SEON, added: “On one hand, this is a good thing for the actual consumers to protect their own identity. But actually, we have less data to look at, so that makes it harder to make the right decisions.”

SEON, an API-based platform, uses data enrichment and device fingerprinting to collect a person’s online data points and uses machine learning to mix it with the customer’s transaction and personal data to create risk profiles. For example, based on an IP address, email and phone number, it creates an online identity and figures out if the customer is using the same email on different social media sites, or whether they are transacting using VPNs or browsers such as TOR.

The platform then gives customers either a red, amber or green risk scoring, which the client uses to safeguard both its customers and their company and define their customer journey.

Kadar explained: “If we say somebody’s suspicious based on their last check, the client can block customer access or ask for further verification such as ID or a selfie to make sure that it’s not a bot or a fake account which is being used for transacting or conducting payments for fraudulent purposes.”

On the flip side, however, the fight against financial crime has also been made more difficult because of data breach fatigue. Consumers are becoming increasingly desensitised because of the number of breaches that have taken place and are not being proactive in terms of mitigating risk themselves.

Jendruszak said: “That’s pushing people into a dangerous zone. Fraud stems from the fact that consumers are becoming more and more unaware, just registering to multiple websites, using their credit cards to pay on more and more e-commerce platforms. And actually, this sort of consumer knowledge and consumer awareness should be brought back.”

From a business stakeholder perspective, companies should do a better job of analysing their data and utilise fraud prevention tools, he noted.

“There’s a much more much bigger return on investment from using a fraud tool than from not using one and being faced with a bunch of fraudulent transactions – or losing credibility in society.”

Kadar added that while machine learning is a great tool in fraud prevention, it can also help companies and financial institutions become more efficient in general.

“Any business can employ hundreds of thousands of data analysts to manually search for and look for patterns and investigate different connected accounts. But since there’s so much data, obviously machine learning comes in very handy. And it can range from sales and marketing to cyber fraud, as well as predicting customer churn. So I think the use cases are endless for any online businesses,” Kadar said.