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Fraudlogix – Local Business Tackles Large Problem

October 24th, 2010 · 1 Comment

South Florida is no stranger to fraudsters. You don’t have to look far to read about  Ponzi schemes, mortgage fraud, real estate fraud, and countless other scandals. Historically, there has always been a cat and mouse game between the fraudsters and those trying to catch them. The cat in this game is a local company that is tackling a national/international problem surrounding a lesser known type of fraud. Fraudlogix is geared to fighting fraudsters on the Internet, they are focused on a very specific growing problem in the affliate marketing industy. This is a huge undertaking and it’s exciting that it’s being spearheaded at offices located in the surrounding Aventura area. Hagai Schecter, the founder, helped give a better understanding of  this technology and the fraud it prevents.

What comes to mind when you think of affiliate marketing?

Some might think 0f  vitamin sales, but that’s multi-level marketing not affiliate marketing. A little confused, a definition might help.   “Affiliate Marketing”  is defined on marketingterms.com as “Revenue sharing between online advertisers/merchants and online publishers/salespeople, whereby compensation is based on performance measures, typically in the form of sales, clicks, registrations, or a hybrid model.” This is a rapidly growing business on the Internet and partially responsible for the huge profits of many online companies. When there’s success in an industry, it is typical for fraud to breed. This is where Fraudlogix saw an opportunity to solve a problem in the affiliate space.

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Q: What is your company’s mission?

A: Our mission is to create a safe & secure environment for online companies to advertise themselves via affiliate marketing without having to worry about affiliate fraud. Affiiate marketing is when a company pays a commission on each sale instead of paying a flat fee for the advertising. It’s also called “performance marketing” because the advertiser only pays for performance (sales). The technology is proprietary technology and represents a huge breakthrough for online advertisers.

Q: Why do you see a need for the Fraudlogix product?

A: One of the biggest issues (if not THE biggest issue) in the performance marketing space is affiliate fraud. That’s when cyber criminals sign up for an advertiser’s affiliate program and then defraud the advertiser by entering a high volume of stolen credit cards on the advertiser’s website. The poor advertiser then pays the commission to the affiliate and is later stunned when he finds out that the transactions were all fraudulent. By that time the fraudster has disappeared with his commission payment and is off to his next victim. So this is a huge problem because it hurts advertisers that are using performance based advertising and it prevents the performance marketing industry as a whole from reaching its full potential. After all, if it wasn’t for the risk of affilliate fraud, most advertisers would probably prefer to pay only on a performance basis.

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Clearly, affiliate fraud is a very complex issue. Having a few questions answered might help get a clearer understanding. This was not so simple, due to the sensitive and private nature of their business there were some details that had to remain a secret. All they revealed, is that their massive database infrastructure, proprietary technologies and fraud prevention algorithms will impress and give results.

They will be participating in Adtech this year; it’s the biggest trade show for online advertisers and agencies. It takes place next month in the Javits Center in New York City.

It’s great to see a local company making moves and tackling a huge problem in the tech industry.

Q: What was the industry like before you entered the space?

A:We used to joke that www stands for wild wild west. But seriously, affiliate marketing and the performance advertising space as a whole was and still is very much in it’s infancy. We’re seeing more large brands enter the space like Amazon, Walmart and Target. I think in the coming years we’ll see a huge surge of big brand advertisers added to that list.

Q:Do you see South Florida developing into the East Coast Silicon Valley?

A:That might be a stretch, but I do think there’s plenty of amazing talent in south florida and I expect to see more cutting edge technology and promising internet startups in South Florida in the next few years.

Q:What do you say to those who are skeptical about your product?

A:One of our biggest challenges is convincing advertisers that we’re able to do something that hasnt been done before to the same degree. Affiliate fraud has been the achiles heel of affiliate marketing and it’s something that most advertisers think of as something they need to just live with. So when we tell them there’s a new solution for affiliate fraud, we get a lot of “really?” and “no way”.

Q: What kind of privacy do you offer your clients?

A: Privacy is something we take very seriously on a personal and business level. We don’t share our client’s information with anybody!

Q: In an Internet climate of sharing and almost no privacy, why do you value privacy as a company?

A: Because we wouldnt do business with any company that didn’t protect our confidential information and/or didnt respect our privacy. We take it as a given that everyone feels the same way.

Q: What’s next for your company, anticipating any future fraud problems to tackle?

A: Well, what we’ve found is that affiliate fraud is a moving target. Fraudsters are extremely quick and agile in changing the methods they use to defraud advertisers. So I expect that we’ll continue to spend a majority of our time and resources staying one step ahead of the bad guys.

Q: What is Adtech?

A: Adtech is the biggest trade show for online advertisers and agencies. It takes place next month in the Javits Center in New York. Its the industry’s largest gathering and we’re super excited about presenting there. Wish us luck!

Q: Why did u decide to participate?

A: Because its great for business… and the parties are amazing. 🙂

It’s very exciting that a company tackling this type of problem is based in the local area – especially in a tech industry. We’re always on the look out for exciting business concepts coming out of the local scene. Keep us posted.

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