Arkose Labs raises $22 million to automatically detect online fraud

Arkose Labs, which is developing a platform that detects and mitigates online fraud, today announced that it has raised $22 million. CEO and founder Kevin Gosschalk said the capital would be used to hire employees and further develop the startup’s platform, which protects consumers from account takeover, fake account abuse, scraping, spam, gift card abuse, and other scammy activities.

Given that there’s a hacker attack roughly every 39 seconds, this could be a boon for businesses dealing with sensitive data.

Arkose’s products analyze data from user sessions to determine the context, behavior, and past reputation of every request. Depending on the risk score, users are presented with challenges that attempt to differentiate between true users and fraudsters. Authentic traffic is passed on to the enterprise, while inauthentic requests are gatekept by the system.

Arkose Detect, a dynamic risk engine, unearths behavioral patterns across devices and networks in real time for behavioral analytics and anomaly detection. It profiles traffic and triages it based on underlying user intent, which informs dynamic authentication challenges, and it looks for hidden signs of fraud based on data from sessions and behavioral patterns over time.

Arkose Enforce is a challenge-response mechanism that works in conjunction with Arkose Detect to authenticate requests in 31 different languages. Responses are generated from proprietary visual data that ostensibly can’t be recognized or classified by AI algorithms, which prevents attackers from anticipating how Arkose Enforce will behave in the future and helps improve the system with each assessment.

Arkose said in recent months it has substantially expanded its customer base, which now includes brands like EA, Twilio, Roblox, Kik, and Singapore Airlines.

Arkose Labs, which has around 74 employees, is based in San Francisco, with offices in Brisbane, Australia. Microsoft’s venture fund, M12, led this series B round, which saw participation from existing investors PayPal and USVP.

Fraud detection and prevention is a profitable market some estimate will be worth $43 billion by 2023. Barcelona, Spain-based Red Points, which provides online infringement detection and removal tools for brands in beauty, apparel, luxury, sports, toys, and homeware, recently raised $38 million. In March 2018, fraud detection startup Sift Science snagged $53 million, taking its total funding to $107 million. Not to be outdone, Mountain View-based DataVisor, which develops fraud detection software based on machine learning algorithms, nabbed $40 million that same year.

Other online fraud detection companies that have raised big bucks include CashShield, Forter, Shift Technology, Featurespace, Pindrop, Simility, and RedMarlin.

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