Corazon's newest portfolio company stops online fraud before it happens

Andreas Rekdal

Rolled out in the U.S. following the 2013 Target credit card hack, chip credit cards make it harder for criminals to use stolen credit card information in brick-and-mortar establishments. But instead of going away altogether, much of the country’s fraudulent credit card usage simply transitioned online, where fraudsters only need to know the numbers on the card and a few pieces of information about its owner.

Precognitive, a Chicago-based startup that just closed a $1.25 million seed round led by Corazon Capital, is building a cloud-based platform to help online retailers, banks and payment processors take on the uptick in online credit card fraud by determining whether to accept a card before the transaction goes through.

“Really what we’re focused on is looking at what users are doing online from a behavioral perspective,” said founder Sam Bouso. “How people navigate through a website or application, the type of device that they’re using as well as what they’re doing at the end — purchasing something or logging in — and really marrying all that data together to make an intelligent decision about whether the user’s intentions are good or bad.”

For example: In the airline industry, the majority of fraudulent ticket purchases are made at the last minute to prevent analysts from detecting the fraud before the plane takes off. But because many legitimate customers, like business travelers and bargain hunters, follow similar booking patterns, it would be unpractical to put all such transactions on hold or flag them for manual review.

Precognitive can help airlines tell bargain hunters from fraudsters by tracking whether the user has been looking at tickets for the same trip before. Other use cases include helping banks determine whether to block an ATM transaction in a foreign city, based on data collected from the user’s digital devices.

Bouso said Precognitive’s key differentiator is its focus on staying agile in the face of an ever-changing fraud landscape.

“Current fraud groups are moving a lot quicker than the good guys, so there is a growing gap in the marketplace between the problems people are looking to solve and the products that are available,” he said. “We’re very microservice-oriented, and we make sure that nothing we create is indispensable. If we see dramatic changes one year from now, we can remove a piece of our software and plug in a new one without having any problems.”

Joining Corazon in the $1.25 million seed round were Hyde Park Venture Partners, Boston VC firm Flybridge Capital Partners and Accertify co-founder Jeff Liesendahl.

Bouso said the funding will be used to scale the company in the face of growing demand, expanding from four full-time employees to seven in the next week or two. The company will also keep exploring the possibility of diving into new business verticals.

 

Image via Shutterstock.

Do you have news to share? Shoot us an email or follow us on Twitter @BuiltInChicago

Fintech in Chicago

An inside look at Chicago fintech. Discover the best startups and coolest companies revolutionizing finance.

Post a comment

or to post comments

Oh no!

You're fresh out of job post slots.

Upgrade your planmanage current jobs

Create an account

Let startups find you

Create a profile and upload your resume today.

Explore the local startup scene, find your
dream job and hang with fellow techies.

No sales pitches, just awesome original content.

Oh no!

You're fresh out of job post slots.