‘Magic’ Network Lets Companies Protect Against Fraud

Online shopping has made commercial aspects of our lives more convenient – for both companies and consumers. Yet internet-based financial transactions can leave companies vulnerable to scammers who create fake accounts in order to present themselves as honest and reliable, but whose true aim is to make purchases with stolen credit cards. 

Israeli startup Identiq has developed a way of allowing companies to verify a consumer’s identity while still safeguarding the buyer’s sensitive information. 

New users to commercial websites can be an unknown entity, explains the startup, with no shared history to prove that they are honest and who they say they are. But companies who have Identiq software integrated into their systems can share information about those users and their reliability, without exposing personal information. 

This allows companies to streamline the verification process for new users and conduct potentially expensive sales safely and without fear of being swindled.  

“We help companies to fight fraud,” Identiq co-founder and CEO Itay Levy tells NoCamels.  

“When fraudsters are using stolen credentials or stolen credit cards in order to commit fraud, it’s up to the companies to try to figure out who they can trust and who they cannot trust.” 

He explains that for many e-commerce and financial service companies, having to verify a user requires third-party data providers, which tend to be costly and take a long time.  

Therefore, Levy developed a way for companies to help one another verify users while keeping the process as secure from hackers as possible. 

“It sounds like magic,” he says.

Identiq VP Marketing Pola Zen explains that as the capabilities of artificial intelligence grow, so does the danger posed by criminals seeking to steal identities and money who can now speedily create masses of fake users.

“Fraudsters can quite literally create an identity really quickly,” she tells NoCamels. “This is a problem that not only the biggest companies in the world are dealing with, but all of the companies are struggling with.”  

According to Levy, having large companies work together to solve a shared problem is an important development because companies cannot overcome how fast fraudsters move because they work alone. 

“Companies cannot move as fast [as fraudsters]; they are much slower,” he admits. 

To join the process to validate users, a company installs Identiq’s system in their cloud where all of their users’ information is stored. 

Levy explains that each user is assigned a special code every day that is the same across all companies that have the Identiq software in their systems. 

The code matches a person across companies through multiple, encrypted data points including name, address, bank details, email and phone number, without any human eyes ever seeing this sensitive information.

“Nobody knows who’s asking; nobody knows what they actually answered. They just know if what you are seeing matches what others are seeing,” Zen says. 

The software checks to make sure that the user matches across all of the categories – not just some. 

“Say that two data points are the same, then we need other data points that will tell us that the person is the same,” Levy explains. 

Identiq gives every query about a particular user a score between zero and one, depending on how closely the information matches the data held by other companies. The closer the score is to one, the more the data points match. The company is then left to decide whether to proceed with the sale. 

Levy says that once a code has been used to match data about the individual to whom it is assigned, it automatically changes, making the information even harder to decipher. 

The Identiq platform is currently in use by multiple major companies globally, including e-commerce, credit card and travel companies. The startup keeps their names secret, however, to protect their privacy and that of their users. 

Founded in 2018, the Tel Aviv-based company has been majorly funded by venture capitalists, while industry leaders such as Sony and Amdocs have also invested. 

Recently, Identiq won a 2024 Edison Award, an annual competition rewarding excellence in innovation across a range of categories. Identiq won for top innovation for risk-based decisions in a fully private environment. 

Levy sees the software as a way of preserving the traditional word-of-mouth trust that once existed within communities – be they neighbors or businesses. 

“In the old days before the internet, when you had a community of people and someone wanted to join the community there was someone to vouch on their behalf,” he says. 

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