Signyfyd, a provider of anti-fraud technology for e-commerce companies, has raised $56 million in Series C funding from lead investor Bain Capital Ventures, as well as Menlo Ventures and American Express, Tech Crunch reports.
The company, which offers a machine learning-driven pattern recognition system used to spot potential fraud patterns, already has several high-profile e-commerce and retail customers, including Jet.com, Peet’s Coffee and Lacoste.
Signifyd, which was founded by two former PayPal risk executives, guarantees that merchants using its technology will not be hit with chargebacks. If they are, Signifyd pledges to pay them back for the chargeback within 48 hours.
The role of American Express as an investor in this latest round is intriguing. Sometimes investments are just investments, and sometimes they are gateways to a different kind of business relationship. In any case, Amex's investment is a strong vote of confidence in Signifyd from the payments sector.
Anti-fraud companies have been getting a lot of attention lately as retailers, e-commerce sites and payments companies continue to receive market research on a practically weekly basis warning them how big of a threat they are facing with fraud — whether in-store, e-commerce or mobile commerce fraud. Hacker attacks that caused problems for Etsy, Shopify and others are occurring with alarming frequency.
Artificial intelligence and machine learning bring new weapons to the fraud fight, especially in their ability to analyze and find threat patterns in massive amounts of data and customer activity. As Al Pascual, senior vice president, research director and head of fraud and security at research firm Javelin Strategy & Marketing, told Retail Dive not long ago, “The ability to quickly glean insights from massive amounts of data helps to reduce costs relative to leveraging human analysts, while also reducing the time to respond to threats."
There are numerous technologies in play to combat fraud, and whether they lean on machine learning or biometrics or other schemes, all may have some role to play in an environment where a multi-layered security strategy is the best plan to have.
It's no wonder anti-fraud companies also have become targets for acquisition. Mastercard recently acquired biometrics security firm NuData, Visa last year bought Cardinal Commerce and Akamai absorbed Cyberfend. We're not saying American Express is going to move from investor to acquirer overnight, but there certainly is some precedent here for security firms with technology in hot demand to get acquired by bigger players.