hen the black cloud of fraud showers a torrent of trouble onto your merchant's Web site, how strong is your security umbrella? What tools do you provide to keep transactions clean and dry? If your products aren't getting the job done, consider a new services provider that promises to protect retail Web sites from the fraud storm.

FraudScrub.com launched its products at the 2002 ETA Midyear Meeting in Seattle. With a large booth displaying eye-catching graphics, it garnered a lot of attention. What kept everyone's attention was FraudScrub.com's offering: cutting-edge fraud and risk filters.

FraudScrub.com takes online transaction data, scrubs it through a series of filters, then advises whether the transaction will prove problematic. That's the simple description of a complex and technologically advanced system that is the fledgling child of an established organization.

In 1997, four entrepreneurs came together in Florida. They saw an opportunity to help small to midsize businesses easily and quickly set up Internet-based credit card transaction services.

"We're not from a banking background," says Richard Kwiat, President and CEO of FraudScrub.com. "We were from retail and sales and insurance, but we were anxious to contribute and add value to the Internet. It was a pure entrepreneurial spirit, and the result was WebsiteBilling."

WebsiteBilling is the parent company of FraudScrub.com. Its young offspring takes advantage of its five years of credit card transactional technology and databases, converting that experience and resources into a product that can team with all players on the electronic payment-processing field.

"FraudScrub.com was born out of an idea we came up with last year," says Kwiat. "We depend on technology to protect us from fraud, which unfortunately now is substantial. Routers are being sniffed as data is being flown by. Why not take that technology and come up with a more flexible product to work with everyone online - acquirers, processors, banks, ISOs or even direct to merchants. We created a fraud gateway."

According to Kwiat, the proprietary technology contained in FraudScrub.com's gateway offers robust solutions allowing flexible communication to different entities all sharing in the risk of online transactions. The solutions come in the form of two types of scrubs that utilize state-of-the-art ruleset and neural technology.

The first is a "plain scrub" that incorporates internal filters and ruleset technology. If the transaction doesn't pass this test, it gets declined. The second is a "scrub and authorization," which relies on a more sophisticated system of neural technology.

"Neural technology is fairly special, especially at the price we offer," says Kwiat. "It's more sophisticated and complements ruleset by analyzing all aspects of the sale with a profile developed by our software. It looks at the transaction and compares it to transactions we have history on."

Based on a company's need, both are available with different interfaces. FraudScrub.com even can handle a simple setup for companies that want complete control of approval and opt to go as deep as they wish on a per-transaction basis. It appears both solutions are poised to set FraudScrub.com apart from the competition on their own merits, coupled with other differentiators.

"Not only do we offer a great product, but we understand the weaknesses and strengths of the industry and our competitors," Kwiat says. "We have sophisticated technology that is priced at pennies per scrub. Our products are designed for quick and easy setup, in some cases just 30 minutes. Our plug-ins manage risk as opposed to authentication. Our services complement each other so we can manage risk on a wider scale."

Contributing to that scale is FraudScrub.com's ability to plug in such standards as MasterCard and Verified by Visa. Complying with Visa regulations, FraudScrub.com's systems speak only through secure connections.

FraudScrub.com is just as serious about its strategic alliances. Its latest is with iShopSecure, Inc., which has been working with WebsiteBilling for more than a year and recently partnered with FraudScub.com.

"They are great people," says Joseph McDonell, President and COO of iShopSecure. "We have always liked Richard and Roland. They work well together, and we like partnering with good people. No one wants to do business with people they don't like."

How does iShopSecure feel about what this alliance brings to its offering table?

"Our product is a high-end fraud-elimination product. Theirs is more of a scoring system," McDonell says. "We find that merchants are using some kind of scoring system, and inevitably our system is right behind those. When suspect transactions are defined, they funnel down to us. When combined with FraudScrub.com's product, we can help a merchant define which transaction needs to be authenticated. It's a whole turnkey solution. It's also a cross-reseller relationship."

iShopSecure's expectations for the new partnership are just as promising.

"We feel we can launch this through our reseller relationships as well as bring it to large merchants looking for this type of solution," says McDonell. "There are a good number of merchants who don't have fraud systems in place or they are not happy with their current systems. We will be able to introduce or replace with this entire turnkey solution. And, at FraudScrub.com's end, they'll be doing the same. We all want to eliminate fraud." FraudScrub.com is seeking other partners with that same fraudbusting desire.

"We'd like to partner with other companies that offer unique methods of authentication that will set well alongside our product," says Kwiat. "For instance, we are speaking to Equifax. We are always open to forming strong alliances. We are looking for companies with reliability and market recognition."

What type of transactions can Fraud.Scrub.com actually scrub? "Both planned fraud and friendly fraud," says Kwiat. "Friendly fraud gives a merchant more trouble. It's harder to spot, and with online transactions it's a nastier problem. While a stolen card is easy to spot, human deception is more difficult."

To combat both fraud types, FraudScrub.com maintains a database of all types of transactions. Its software sets up a profile, examining sensitive areas and finer points of transactions, and then takes a snapshot of it.

"We don't access each transaction in our history database," says Kwiat. "We have millions of transactions in our history. We do a comparison to a specific point of information in those snapshots. Then we transfer the 'experience' into our database, not all the data."

The appeal to merchants is obvious. Is the appeal to ISOs just as contagious? FraudScrub.com is hoping so.

"We want to work with ISOs, but we've not done a lot of marketing yet," says Kwiat. "As ISOs set up online merchants, it behooves them to line up fraud services for their merchants as well. That's where we come in. Our partner programs allow for 100% sharing in revenue of all transactions we scrub. We also offer private label. We don't need to be seen by the end user."

FraudScrub.com is in beta testing with a number of national ISOs. While the ISO channel is part of FraudScrub.com's future, its current market is focused on large businesses.

"When you look at people who share risks, our target market is acquiring banks, processors and large merchants," says Kwiat. "We are not that experienced with the ISO community and are open to working with any with solid banking relations."

Gaining market share with the ISO community presents a challenge FraudScrub.com probably will overcome. What may not be as easy is taking advantage of all market opportunities.

"Our biggest challenge is throwing the resources at it to take advantage of the potential out there," says Kwiat. "We have the right product at the right time but, like so many, money is an issue. We do have funding but are always looking for more, particularly when an opportunity is in front of you. It's a matter of how quickly you can race to it."

Kwiat sees fraud as gaining in the race. He sees the lack of product as the biggest obstacle facing the payment-processing industry.

"Regarding fraud, it has been the lack of tools available to merchants," says Kwiat. "While we are certainly optimistic with Visa and MasterCard's products making a dent, that remains to be seen. The need for our product came about because no one had the magic tool. I see Verified by Visa as a step in the right direction, but as long as there are people out there on the Internet who are intelligent, they will try to circumvent whatever system is out there. It is an ongoing battle."

Kwiat is banking on FraudScrub.com being a mighty force in that battle.

"I' d like to see us become a standard in the industry partnered with processors and banks and be a recognized product or add-on to help manage merchant accounts," says Kwiat.

"We believe that we will help everyone in a number of ways by helping merchants keep their fraud costs down. With the cost of losing merchandise as well as extremely prohibitive costs of chargebacks that exceed card association thresholds, what is the alternative? We provide a revenue opportunity. It's a win-win situation for everyone."