News, Education and Events Decoding Digital Payments & Fraud

News, Education and Events Decoding Digital Payments & Fraud

Accertify Leverages American Express’s Global Reach

Accertify’s anti-fraud solution is relied on by some of the largest U.S.-based and global brands to manage card-not-present and other types of risk. Last fall, following several years of growth, the company was acquired by American Express. Accertify co-founder and CEO Jeff Liesendahl says in 2011 the company will concentrate on global expansion of its fraud prevention platform and promoting its new chargeback management service.

A decade ago, Liesendahl and the rest of the management team of the online travel startup Orbitz were struggling with how to address fraud in an industry where individual transaction value is high and margins are miniscule.

“For online travel agents, fraudulent transactions average $390 and you only make $5 when you sell a ticket,” says Liesendahl. “So you have to sell a lot of $5 tickets to make up for one bad transaction.”

Liesendahl and other Accertify founders were dissatisfied with commercially available fraud solutions at the time, which they believed failed to address many parts of the screening, review and other processes that were necessary for stopping fraudsters.

The Orbitz team looked at all the data they had as merchants—generated internally and externally—and built an end-to-end system from scratch that was more comprehensive, data-driven, automated and capable of evolving as fraud scams did.  The system successfully solved Orbitz’s fraud problem and provided a springboard for the platform Liesendahl and his team later created at Accertify.

Growing Despite Economic Crisis
In 2008 and 2009, in the midst of the worst economic conditions in 75 years, Liesendahl says Accertify was able to increase its roster of clients, nabbing some of the biggest brands in e-commerce, including Southwest Airlines, Mexicana, Urban Outfitters, and Simplexity.

“We launched the product and then the economy fell off,” he explains. “What I kept saying to our folks was ‘we’re selling a product that helps people cut their costs. How would you like to be at a company that’s promising to raise revenue?’ I have case studies from the largest companies where we’ve reduced fraud 40 to 80 percent. For the vast majority of clients we’re increasing revenue on top of that because they’re not turning down good orders anymore. So at that time, when the economy’s going bad, if you can cut your fraud costs and let more orders go through, you’re very attractive to prospective clients.”

It was this strength, at a critical time, along with an affinity discovered over time that led to the highly visible acquisition by American Express , according to Liesendahl.

“American Express is in a position to understand fraud very well,” he says. “We had met with their fraud group multiple times and we kind of thought alike. We looked and asked if it made sense to partner with someone big.”

For a company with global aspirations, it absolutely did.

While his company was strengthening its position in the United States, Liesendahl said being acquired by American Express was vital if Accertify wanted to expand internationally. And this year, expansion is very much in the plan.

“For 2011 we’re concentrating on rapid growth and going worldwide,” he says. “One of our founders just opened our office in London. Since we’ve been acquired we’ve opened in London, Mexico, Brazil and we’ll be going to Asia.”

Another priority for Accertify in 2011 will be growing the company’s recently introduced chargeback management service.

Not So Glamorous
At a recent industry conference in Las Vegas, Accertify introduced a new service that automates what has traditionally been a heavily manual, and therefore expensive, process. For e-commerce companies, fraud gets all the publicity, according to Liesendahl, but reducing chargebacks is just as important. Maybe more.

“You hear a lot about fraud because, frankly, it’s interesting to talk about,” he says. “Chargebacks are hidden in the back office; no one talks about it. But in my experience, I think companies spend just as much or more on managing chargebacks as they do on fraud.”

The Accertify Chargeback Management Service is a single-source platform designed to manage dispute processes for all types of credit and debit cards and alternative payments, regardless of brand. The company says the service addresses the chargeback process from review and analysis through representment and reporting to help merchants save time, reduce manual efforts and boost revenue recover.

The platform is available as a hosted solution or merchants can also outsource their entire chargeback management operations to Accertify on a full or partial basis.

“There are hundreds of chargeback codes,” Liesendahl explains. “Is it the customer didn’t understand the charge? Was it fraud? Was it this, was it that? Every payment brand does it differently, every country does it differently and what information you need to fight each one is different. Just imagine the cost to train somebody to do this. We said this is perfect to automate. We’re already getting all the orders through the fraud system, so we have all that information.”

Liesendahl says the technology can sift through all the data they are collecting anyway in their anti-fraud efforts and statistically tell merchants which chargebacks they should fight and which ones they shouldn’t.

“It’s a mathematical equation,” he says. “What does it cost a company to process, how much is the chargeback and what’s the chance they are going to win?”

Accertify has two beta clients using the chargeback service and, according to Liesendahl, a list of clients chomping at the bit to implement it.

He says Accertify’s genesis as a merchant makes all the difference when launching a new service. Its clients trust that the company will do right by them.

“Our clients can go to sleep at night knowing we’re in this game with them,” says Liesendahl. “Our background is as a merchant. We feel we fight that battle. Handling chargebacks is just the next logical step for us.”


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Daniel Leibovitch