Overview

Crowdfunding heralds a new platform of money lending and investment. Fledgling businesses, charities and social campaigners can tap into the power of a shared economy via the global reach of online forums, accessing a potentially limitless groups of investors and philanthropists.

Crowdfunding has fundamentally switched the way a project can be financed. Large loans from bank managers or sympathetic family members have been replaced with multiple small investments from like-minded people. Crowdfunding is used by business startups, community projects and charity campaigners, to individuals fulfilling a lifetime ambition or paying for a loved one’s medical treatment. Incentives and rewards are equally varied:

  • For charity-based ventures, niche projects target backers who donate altruistically because they are sympathetic to a specific cause.
  • Smaller projects may tempt investors with more tangible incentives. A fledgling band might offer free tickets to a gig, or a new restaurant could give away free meals.
  • Emerging businesses sometimes offer backers an equity share, or funding could be considered a loan which is repaid with interest. This gives small investors the opportunity to try their hand at managing a portfolio without the associated risk of large-scale lending.

Although crowdfunding is still seen as an alternative finance model, it is currently thought to raise more than $5 billion for projects worldwide.

Business Problem

The complex interplay between the crowdfunding platform and the exchange of money/rewards between donors and fundraisers provides fertile ground for cybercriminals. The fraud risk primarily comes from:

  • Fraudsters setting up bogus fundraisers to attract legitimate donors.
  • Fraudsters hacking in to existing accounts to steal money.
  • Crowdfunding platforms processing phony payments by fraudsters trying to cash in on monetary returns or equity stakes.

Key Benefits

  • Prevent cybercriminals setting up fake ventures or campaigns on existing crowdfunding sites
  • Protect existing accounts from fraudulent takeover
  • Reduce payment fraud using stolen credentials
  • Safeguard customer experience by reducing friction associated with account set-up and transaction processing

Leveraging Digital Identities

ThreatMetrix layered approach validates the end user’s true digital identity through information related to devices, threats, identity and behavior. At the same time, ThreatMetrix real-time decision analytics platform provides additional insights to differentiate trusted customers from potential fraudsters. This knowledge allows crowdfunding organizations invaluable insight into who their customers really are and whether their transactions can be trusted. Underpinning this solution is world’s largest Digital Identity Network built on shared intelligence from over 1 billion transactions per month from more than 4,000 of the world’s most trusted brands.

The ThreatMetrix Solution for Crowdfunding Platforms

ThreatMetrix offers real-time fraud detection and prevention solutions which allow crowdfunding organizations to minimize fraud attacks. The ThreatMetrix platform enables them to:

Reduce Fraudulent Registrations: Fraudsters often use false and stolen information to register new accounts. If fraudsters can convince crowdfunding platforms that they are legitimate fundraisers, they could potentially access limitless funds from unsuspecting donors. ThreatMetrix provides a risk-based fraud detection solution that analyzes the complete digital identity of the campaign creator to detect the use of stolen identities, suspicious devices, IP addresses, locations, credit cards and more.

Protect Against Account Takeover: ThreatMetrix leading account takeover prevention solution helps crowdfunding platforms:

  • Prevent unauthorized access to existing accounts using credentials obtained through phishing attacks, bad devices, malicious personas, shared passwords, or keyword loggers.
  • Analyze subsequent access requests in real time to identify suspicious patterns, compromised devices, unusual locations (including attempts from known botnets or hidden proxies/VPNs) and suspicious configurations.
  • Detect the presence of malware on a legitimate user’s device, detect activities from bots/scripted mechanisms, and detect account takeover attempts from the mobile channel.

Prevent Payment Fraud: Crowdfunding sites must make instant decisions about card-not-present (CNP) interactions. ThreatMetrix detects stolen credit cards in real time by combining device attributes, malware detection and sophisticated analytics with the user’s identity and transaction details. This real-time credit card fraud analysis offers crowdfunding organizations an additional layer of protection to reduce the costs of credit card fraud while protecting the online experience for legitimate customers.

Long-Term Success

Since implementation, ThreatMetrix has helped crowdfunding platforms lower fraud, reduce losses and deliver an enhanced experience for trusted users. This has been supported by the following key capabilities:

  • ThreatMetrix Smart ID helps the crowdfunding organizations recognize a returning device even when cookies are deleted / disabled. Derived from the analysis of browser, plug-in, and TCP/IP connection attributes, Smart ID can differentiate between trusted users and cyberthreats.
  • ThreatMetrix Trust Tags enable the crowdfunding organizations to differentiate between fraudsters and legitimate customers. Trust can be associated dynamically with any combination of online attributes such as devices, email addresses, card numbers or any other attributes involved in accepting, rejecting or reviewing a customer.
  • The Digital Identity Network, part of ThreatMetrix SaaS solution that analyzes billions of transactions, allows the crowdfunding organizations to access identifying attributes, characteristics, and behaviors associated with trusted users. Data shared by organizations, along with information available from ThreatMetrix device profiling, establishes a unique Digital Identity for each customer.
  • ThreatMetrix deep connection analysis technologies give the crowdfunding organizations a clearer view of suspicious activity. Fraudsters often attempt to hide behind location and identity cloaking services such as hidden proxies, VPNs and the TOR browser. ThreatMetrix accurately detects the use of these technologies and, in the case of proxies and VPN, allows the lender to see the true IP address, geolocation and other attributes of each transaction.

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