It is hard to underestimate the role of E-commerce in a world where most communications happen on the web and our virtual environment is full of advertisements with attractive products and services to buy. Meanwhile, it is obvious that many criminals are trying to take advantage of it, using scams and malware to compromise users' data. The level of E-commerce fraud is high, according to the statistics. With E-commerce sales estimated to reach $630 billion (or more) in 2020, an estimated $16 billion will be lost because of fraud. Amazon accounts for almost a third of all E-commerce deals in the United States; Amazon's sales numbers increase by about 15% to 20% each year. From 2018 to 2019, E-commerce spending increased by 57% -- the third time in U.S. history that the money spent shopping online exceeded the amount of money spent in brick-and-mortar stores. The Crowe UK and Centre for Counter Fraud Studies (CCFS) created Europe's most complete database of information on fraud, with data from more than 1,300 enterprises from almost every economic field.
Bottom Line: Barclays' and Kount's co-developed new product, Barclays Transact reflects the future of how companies will innovate together to apply AI-based fraud prevention to the many payment challenges merchants face today. Merchant payment providers have seen the severity, scope, and speed of fraud attacks increase exponentially this year. Account takeovers, card-not-present fraud, SMS spoofing, and phishing are just a few of the many techniques cybercriminals are using to defraud merchants out of millions of dollars. But it doesn't have to be a choice between security and a frictionless transaction. Frustrated by the limitations of existing fraud prevention systems, many payment providers are working as fast as they can to pilot AI- and machine-learning-based applications and platforms.
Many elements contribute to the expanding fraud problem that online companies must contend with. These include: new criminal tactics, prolific growth of Internet-able and commerce capable devices, payment platforms offering an array of payment types, and the growing scale of data breaches globally. At the forefront of this escalation is online fraud. Online fraud has realized a rapid rise as consumers have migrated towards online for their purchasing needs and, subsequently, fraudsters have followed the money. And because fraudsters don't comply to any set rules, their tactics are aimed at exploiting opportunities for the least amount of effort with the greatest gains.
Forter, a company that uses machine learning to detect and prevent fraud in online retail transactions, announced today that it has raised $50 million in a series D funding round led by March Capital Partners, bringing its total financing to $100 million. Salesforce Ventures joined the round, along with previous investors including Sequoia Capital and New Enterprise Associates (NEA). Global online retail sales amounted to more than $2 trillion in 2017, and this number is projected to reach more than $4.5 billion by 2021. But as online retail grows, so does online fraud. Account takeover attacks are on the rise, as are high-volume automated "bot" attacks and so-called policy attacks like coupon abuse.
There are several companies claiming to offer AI solutions to consumer packaged goods (CPG) companies. AI solutions for business problems in the CPG industry appear to be less legitimate than we first thought. All of the companies discussed in this report employ relatively credentialed people in their C-suites, but their AI experience is generally lacking compared to other sectors we've covered (in terms of AI-related talent density, and experience actually using AI). The companies we examine in this report are older firms, who, unlike some of their startup competition, have no founding team members or C-level leadership with a strong background in AI. Many of the firms featured in this article, however, have hired experts in AI to run their AI practices and build AI-related products and services, but others have not hired any such experts to back up their claims of AI use.