Equifax announces the $640 million purchase of fraud prevention specialist Kount

Darren Sinden

Online fraud is a growth industry, a 2019 report by American Express suggested that as much as 27% of all online sales turn out to be fraudulent

Global data analytics company Equifax has its buying boots on and is splashing out $640 million on Kount, a business that provides fraud prevention and protection software for online transactions through risk-based authentication.

Kount’s technology covers the whole transaction process from account creation and opening, through to payments and disputes, as well as helping to reduce failed transactions and card chargebacks.

Kount software uses both machine learning and artificial intelligence techniques to verify identity and create trust scores for the validity of online transactions by screening vast data sets to establish identifiers and patterns of behaviour, and its identity trust network is used by 9,000 brands worldwide to protect them against digital fraud.

Kount came to life in 2007 and the company now has 39 patents in digital fraud prevention and has another 9 applications outstanding. The business is headquartered in Boise, Idaho and has been backed by the likes of CVC Ventures, who put $80.00 million into the business back in 2016.

Equifax is probably best known as a consumer credit rating agency and a competitor to the UK listed Experian. Equifax employs 11,000 staff and operates in 24 countries around the globe. It is an S&P 500 constituent, with a market cap of $22.60 billion.

Equifax has itself been a victim of cybercrime and was notoriously hacked in 2017. A data breach that compromised the personal information of 147 million people. Equifax agreed to pay $575 million in settlement of claims arising from that incursion.

Online fraud is a growth industry, and in the UK alone in 2019 there were estimated to have been 2.75 million fraudulent transactions. More than double the figure for 2014, according to Statista data.

A 2019 report by American Express suggested that as much as 27% of all online sales turn out to be fraudulent. Furthermore, the American Express survey found that 37% of all attempted online transactions were abandoned in 2019. Up from 31.0% seen in 2018.

Almost 77% of the merchants surveyed by Amex said that their company had been a victim of some type of fraud. More than 30% said that this had involved stolen or counterfeit cards and 36% highlighted chargeback fraud as an issue.

Equifax believes that by purchasing Kount it will be able to continue to crack down on this type of fraudulent behaviour.

Mark Begor CEO of Equifax was quoted as saying that: “Equifax is taking advantage of our strong 2020 outperformance and cash generation to make this strategic acquisition.”

And that “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.”

Chargeback fraud and other online payment scams have been a constant thorn in the side of FX and margin trading brokers for many years, and any innovation that can help to reduce their incidence is to be welcomed.

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