We recently connected with Tamas Kadar, CEO and co-founder at SEON., which aims to harness the power of AI to protect your business from fraud, get a 360° view of customers, and increase conversion rates.

Kadar talked about the latest issues involving e-commerce fraud. His company just closed a $94 million Series B round in April and is focused on expanding their fraud prevention services for U.S. businesses.

During our conversation, Tamas talked about fraud in the Metaverse, the latest in crypto-related developments, NFTs, blockchain & fraud, and BNPL fraud.

Our discussion with Tamas Kadar is shared below.

Crowdfund Insider: Crypto exchanges are already considered high risk. What are some ways companies are combating crypto exchange fraud?

Tamas Kadar: At SEON, we understand the risks of cryptocurrency exchange fraud better than most. Along with my co-founder, Bence Jendruszak, I started a cryptocurrency exchange some years ago, while at university. Not long after, the exchange was targeted by fraudsters, which led to us building the first iteration of what would later become SEON.

In the years since, crypto exchange fraud has become even more rife. For the most part, fraudsters use stolen credit card numbers to purchase cryptocurrencies, which triggers chargeback requests from the legitimate cardholder. Fraudsters also use fake IDs to bypass any KYC checks that might otherwise stop them.

Crypto exchange platforms need to have protocols in place, which allow them to:

● Safely onboard genuine users
● Process fiat payments to buy crypto
● Secure storage and transactions

One of the best ways to do this is to improve the ID & verification techniques within the sign-up process. However, it’s important to do this in a way that doesn’t add friction to the customer journey. This is often easier said than done, especially as crypto users tend to not like giving away personal data as it goes against some of the sector’s core principles.

That’s where data enrichment tools come in. Such tools allow crypto exchanges to get more info about their customers, without having to ask for it. Data enrichment solutions, such as the one we offer at SEON, allow companies to get a full picture of who their users are before they sign up, and in doing so, can identify risky actors before they’re able to commit fraud.

Crowdfund Insider: How is the metaverse creating new forms of fraud and deception?

Tamas Kadar: There is always a new opportunity to scam, and fraudsters are always ready to figure out how – especially when it involves a monetary transaction. As such, the metaverse offers an abundance of potential new avenues for fraud. Primarily, many metaverse solutions are vulnerable as they’re unable to stop people establishing more than one account.

Having multiple accounts on a metaverse platform allows fraudsters to take advantage of ‘free credit’, discounts or money back promotions designed for new users. Simply put, this may seem like an easy and even innocent loophole, but setting up multiple accounts to benefit from promotions is still fraud.

Likewise, metaverse platforms must watch out for influencer fraud, which has previously affected social media platforms, like Twitter. This type of fraud can result in people following fraudulent links or entering sensitive data to enter promotions they believe to be endorsed by trusted or well-known, established users.

Crowdfund Insider: New tech brings opportunistic bad actors. What are the risks of NFT fraud and how do you stop it?

Tamas Kadar: It’s still only early days in the world of NFTs, but you’re beginning to see the size and scope of the nascent sector’s fraud problem. NFT fraud can take many forms, whether it’s people minting artwork they have no legal ownership of, to laundering money through fake NFT sales. Sadly, there’s no ‘silver’ bullet solution on offer to fix all of these issues.

Preventing NFT fraud requires action from all involved parties. For one, end users need to become even more aware about the risks of fraud and ensure they’re always doing their due diligence before purchasing NFTs. Similarly, companies dealing with NFTs should look to refortify fraud prevention protocols to ensure they’re getting the best protection.

In practice, this can mean layering existing defence systems with things like two-factor authentication and machine learning to boot out inauthentic users, bots and high-risk ‘online personalities’. As with the metaverse, enabling browser and device fingerprinting can also make a huge difference in aiding this effort.

Crowdfund Insider: Why is money laundering a problem in crypto?

Tamas Kadar: It’s a big problem, and cryptocurrency firms are now under increasing pressure to meet new anti-money laundering (AML) regulations. If they fail to do so, companies in the sector are liable for big fines, legal issues, and damage to their business reputation. The good news is that transaction monitoring solutions now offer a way to mitigate the risk.

Full end-to-end fraud tools, like that provided by SEONallow companies in the crypto space to monitor user and transaction data. In turn, this data can be logged, scored via fraud detection risk rules, and used to decide if a business should flag the account as a potential risk, before automating next steps. In fact, our solution is able to check an individual’s digital footprint in real time, analyzing more than 50 social and online platforms to ensure new accounts can be verified effectively.

Crowdfund Insider: BNPL is attracting the attention of cybercriminals and fraudsters. What is the best way for merchants to reduce the risk of BNPL fraud?

Tamas Kadar: BNPL companies inherently take a risk with every new customer they onboard. Like with crypto, fraud in this area can take many forms, but there are some simple measures, which can be implemented to reduce its success. As with everything else, gathering data during the onboarding stage makes fraud prevention swifter and simpler.

Most BNPL companies probably already perform basic KYC checks and fast credit scoring. However, it’s important to move to more robust tools like device fingerprinting, IP address checks and velocity rules. I’d also recommend that companies take advantage of digital footprint analysis, which allows them to find out a wealth of information without any additional friction.

Finally, considering recent measures, it’s probably now time for companies to go even further and to utilise data enrichment solutions to help them build more complete pictures of users, without adding extra friction to the onboarding process. In doing so, companies are able to get more information about their customers from basic points of information.

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