41st Parameter Casts a Wider Net for Its Anti-Fraud Technology

Flush with new funding, anti-fraud software developer The 41st Parameter this week embarked on the next phase of its growth plan by introducing PCPrint, a component of its fraud-detection technology that the company will offer to vendors, processors, and other firms involved in e-commerce. In fact, Ori Eisen, founder and chief executive of the Scottsdale, Ariz.-based company, says his firm is targeting as PCPrint's potential customers so-called OEMs, or original equipment manufacturers?in this case software vendors?that he considers competitors, though he won't identify them. The 41st Parameter's intent is to get its technology built into e-commerce systems used by companies that don't want to buy its standalone products, FraudNet and PhishingNet. FraudNet is tailored for retailers' e-commerce sites, and PhishingNet is for banks hoping to reduce the amount of phishing fraud on their online banking sites. The company's technology is built around more than 200 algorithms for identifying computers used by online fraudsters. For instance, if an e-commerce site's order list includes five separate customer names, billing addresses, and related personal data that happen to be linked to one computer, there's a good chance a fraudster is using multiple credit card accounts from that computer, Eisen says. Armed with that data, the retailer can reject an authorization request originating from the suspect computer. The 41st Parameter's algorithms assess the potential risk in a host of obscure data sources?everything from the distance of keys the user pushes to enter information in online fields (fraudsters tend to be lazy and use keys close together) to the time differences between a computer's clock and the clock of the server hosting an online site that the PC logged on to (Digital Transactions News, April 22, 2005). Such measurements, taken covertly, help The 41st Parameter build a risk profile for the computers logging on to its customers' Web sites. The 41st Parameter claims PCPrint can differentiate individual PCs visiting a Web site regardless of past registration, the credentials presented, or the Internet connection. PCPrint will give an assessment in a millisecond because it uses fewer parameters than the standalone products, which can take a few seconds, according to Eisen. For some potential customers, that time difference is crucial. The 41st Parameter has eight customers for its current products including some large banks and retailer Neiman Marcus, says Eisen, who won't identify the others. He adds that he has six “redlined” agreements for PCPrint that he expects to complete soon. The two-year-old company in May obtained $11.2 million in venture-capital funding from new investor Kleiner Perkins Caufield & Byers, a Menlo Park, Calif.-based technology-oriented private-equity firm, as well as its earlier backer, Palo Alto, Calif.-based Norwest Venture Partners. Eisen wouldn't give financials, but says, “This year we should turn profitable.” Next up, he says, will be products to fight credit card application fraud and so-called click fraud in which fraudsters click on online advertisements multiple times in hopes of overstating an ad's viewership in order to generate more revenue.