After he suffered an account hacking himself, entrepreneur Ari Jacoby decided to find new ways to disrupt account takeover fraud … one login at a time

NEW YORK, NY / ACCESSWIRE / January 31, 2022 / In 2018, tech entrepreneur Ari Jacoby woke up to discover that one of his accounts had been hacked. Just like that, all of his music was gone. He was able to regain control of his account within a few days, but he was surprised at how angry and emotional the experience made him-on some levels, it felt just as intrusive and personal as someone breaking into his home or car.

"It wasn't a financial account," notes Jacoby, "but that didn't make it any less time consuming, painful, and violating."

Research shows that 22 million American households have been victims of account takeover (ATO) fraud as of 2021 - a type of fraud that now affects virtually every type of organization, representing a quarter of all login attempts, and 32.8% of attempted e-commerce logins.

ATO can have devastating impacts on businesses and consumers alike. When consumers' financial accounts are hit, the average loss is $12,000, while ATO now accounts for 14% of all retail fraud losses. That impact is increasing all the time, as the number of account takeovers grew by 307% from April 2019 through mid-2021. ATO fraud leading to loyalty point theft is also on the rise, because criminals can trade stolen points for awards or sell them on the dark web for cash.

With the sophistication and frequency of these attacks increasing constantly, the question of how businesses can protect themselves and their customers has never been more timely.

A different approach

After his own brush with identity fraud, Jacoby decided to take action himself-which led to the founding of Deduce in 2019.

Before Deduce, Jacoby had already amassed two decades of experience in data, privacy, and security. He had led companies including Solve Media/Circulate (acquired by LiveRamp) and Voicestar (acquired by Marchex), to successful exits, and had amassed experience in building identity graphs to combat fraud from bot traffic in the advertising technology industry.

During this time, Jacoby had relied heavily upon data and data science in order to "put the right advertisement in front of the right human at the right time." The more he learned about cybersecurity and identity fraud, the more he realized that many of these same technologies and approaches could be harnessed to protect customers from fraudsters. "Account takeover happens more than 50,000 times per hour. I want to do something about that and turn off the sources of funding for the bad actors."

It takes a network

In 2022, the clichéd vision of a hacker as a solitary figure in a basement is more out of date than ever. In reality, hackers and fraudsters today are highly funded and sophisticated networks, or even Nation-State actors, able to hit hard and move fast, targeting huge numbers to devastating effect. As Jacoby puts it, "This means, when it comes to fraud prevention, it takes a network to beat a network."

This is where the Deduce Identity Network comes in, a consortium of over 150,000+ participating websites and apps that anonymously share every account creation, login attempt, and transaction in real-time for over 400M privacy compliant, unique identity profiles that collectively generate in excess of 1.2B daily activities. On average, Deduce sees the majority of the U.S. population transact in real-time, several times a week - a scale previously only available to the Amazon's and Google's of the world.

"The fraud landscape is continuously evolving," explains Jacoby. "This is why it's so important to provide real-time trust and risk signals. It's a new, better, and faster way to provide data that was previously unavailable, and it's also more easily and quickly explainable for security and fraud forensics teams."

In addition to doing what they can to help brands protect their customers from account takeover fraud, Jacoby notes that it is also vital for companies to guard against registration or new account creation fraud, in which criminals create accounts to receive financial benefits such as discounted purchases for sign-up, cash bonuses, free trials, and more. All of which can be highly lucrative.

Once again, it's the data that makes the difference: most companies have zero information about the user creating the account and therefore cannot make a data-informed decision about the legitimacy of the new potential customer.

Balancing security and customer experience

Jacoby believes that companies focused on fraud prevention shouldn't just track potential fraud in real-time - they also need to be able to accomplish this unobtrusively, with an eye towards reducing customer friction and false positives wherever possible.

Sadly, traditional methods of fraud mitigation are increasingly ineffective. The harsh reality is that static data such as name, address, phone number, social security number, mother's maiden name, and more, has already been breached in dozens of previous high-profile incidents and is easily available to bad actors on the dark web. Device digital fingerprinting is another legacy identity fraud prevention method that is less effective. Legacy fraud prevention solutions must be augmented with real-time activity intelligence to combat fraud.

Speed is everything

In a recent test with a top-tier credit card issuer - Deduce saw activity from over 74% of users prior to a credit card application and on average the Deduce Identity Network had more than three months of historical data on each user. In many cases, over 20% of the users were seen transacting across Deduce's network within 24 hours prior to applying for their credit card: an unprecedented level of insight that raised eyebrows at a company that thought they'd seen it all.

"Every morning, thousands of people awaken to the realization that they have been compromised," adds Jacoby. "We're maniacally focused on making a dent in this problem, to ultimately rid the world of this scourge."

Media Contact:

Angela Mitchell
Email adress: angela@deduce.com

SOURCE: Deduce