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potentially connect to over 30 major gateways, and He believes the key to fraud prevention is to learn from
within both components multiple versions exist. Online every transaction in real time and through sequence
marketplaces offer abundant possibilities. In the past, analysis to determine that customers buying airline
shopping cart providers built integration for payment tickets would also be expected to purchase hotel rooms or
into gateways, but more recently many have decided it's rental cars without triggering false positives in payment
easier for third parties to build modules that connect the systems.
shopping carts to gateways, Sherwin noted.
With fuzzy logic, merchants are able to add more risk,
AI digs into fraud behaviors which can reduce false positives by as much as 20 percent,

Artificial intelligence (AI) in its many forms has gained he said. That's because it creates an allowance to look for
prominence as a dynamic security protocol. Dr. Akli data for smoother decisioning. For example, a purchase
Adjaoute, founder, President and Chief Executive Officer above $100 that would normally trigger a flag with fuzzy
at Brighterion, is a former university professor who holds logic would be grouped with items priced within the same
a Ph D in AI. He is one of the pioneers behind Brighterion's range, say $99.99, which is less abrupt when monitoring for
patented Smart Agent technology. potential fraud activity.

"When we started, we were purely in the payments Another effective AI tool, constraint programming creates
industry, working with issuers and acquirers like constraints over time associated with individual profiles,
Worldpay, Mastercard, BNP, Deutsche Bank, JCB, Bank such as increased spending when a new school year
of America and many others," Adjaoute said. "Then we begins, or on paydays or when vacationing, developing
moved to cyber and homeland security." The European greater precision as profiles build.
Commission selected Brighterion to support the Passenger
Names Records project to thwart terrorist networks. Adjaoute advises clients in the market for fraud prevention
technologies to try products before buying them and to
Smart Agent technology can link data for one-to-one test more than one product since the product they select
behavioral profiling. "We create a Smart Agent for will eventually touch a company's risk, brand, bottom line
each customer," he said. "A Smart Agent is a virtual and reputation.
representation of a customer. Because we do that for a Insurance rises to the challenge
customer, or it can be a merchant or cardholder or family,
every transaction related to you goes through your Smart Faced with the persistent barrage of fraud threats, many
Agent as an incremental use that will be added to your companies are turning to cyber insurance, a budding
Smart Agent, so that we have a 360-degree view." segment for insurers. Insurance provider Lloyd's of
London saw a 50 percent increase in such policies written
For cybersecurity clients, some agencies send up to 62 in 2016. And the AGCS Cyber Risk Guide estimated that 90
types of social data through Brighterion's AI system. All percent of cyber policies being written today are for U.S.-
totaled, 10 artificial intelligence technologies, including based companies.
case-based reasoning and fuzzy logic, work in combination
to adaptively learn behavior and share intelligence to stop In January, Frates Insurance & Risk Management
previously unknown fraud schemes in real-time. introduced a Payment Card Industry (PCI) Data Security
Standard (DSS) insurance program for members of the
Operating behind the scenes, Brighterion's technology is Electronic Transactions Association. In describing its
also fast. "We currently do 12,000 transactions per second new breach insurance policy, Frates said it "indemnifies a
with less than 3 millisecond response time," Adjaoute portfolio of merchants for the PCI liability they face as a
noted. "We're the only company that guarantees by result of a breach." The company also provides protection
contract 100 percent vulnerability" when companies agree against chargebacks, CNP fraud and other related coverage
to use accepted Linux boxes, which are not considered valued by the payments industry.
expensive.
As fraudsters continue to develop new schemes to
Because its technology works with any data in any format defraud legitimate businesses and their customers, the
and doesn't use predefined rules, the average customer counteroffensive surges forward. Although complete
can go live in a few weeks in most cases. "We do not use protection may never be fully realized, fraud detection
predefined rules, because they have poor detection rates; and response times are being accomplished at record
it's old technology," Adjaoute said He also pointed out that speed. This should offer some relief to online merchants,
database systems are not necessarily a good choice because since 1 of every 97 online transactions during the 2016
they don't scale well in adaptive learning situations and holiday season was a fraudulent attempt, according to ACI
tend to be more expensive. Worldwide.

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