Fraugster Lands $14 Million to Shore Up Mobile Payments, eCommerce

With the Christmas shopping season about to crank up in full earnest—in some quarters it already has—there’s a greatly increased potential for fraud that goes right along with it. Whether it’s a mobile payments fraud of the kind that’s been worrying potential users since it got started, or some other kind of retail fraud, it’s readily apparent there’s a lot of fraud in the market. Fraugster, a software operation geared toward stopping said fraud, just landed a $14 million Series B investment round.

Backed up by a slew of investors—including names like CommerzVentures as well as SpeedInvest and Seedcamp among others—Fraugster’s systems have drawn quite a bit of interest. In fact, one of the investors, Munich Re, is actually insuring the Fraud Free product from Fraugster, reports note, which effectively assumes liability for any transaction to protect the retailer from the consequences of fraud.

Fraugster, for its part, plans to take that $14 million and plow it right into new markets. It’s got plans to reach the United States, as well as Asia and farther into Europe, not surprising given that it’s based in Berlin. Its offering should prove welcome, as it features a proprietary system that takes data from a range of sources and analyzes that data rapidly to determine whether the purchase is fraudulent or not.

Fraud is a significant problem. So significant that it’s likely been holding back the entire concept of mobile payments, at least in part. People are deeply concerned about security in mobile payments, to the point where many are staying out of the concept altogether. With systems like these to help insulate retailers against fraud—and also keep fraud out of the end user’s line of sight—it may well work to bring more users in. Since this seems to target retailers, though, its impact may not be so immediately felt. If retailers use this as an opportunity to accept mobile payments, however, that could improve things by offering consumers more options in terms of mobile payments use, which is another, albeit lesser, hurdle to getting users in the fold.

Fraugster’s impact on the field may prove limited, but preventing even one case of fraud that actually is preventable may ultimately help in the end.