Traditional fraud-detection systems utilize rule-based decisioning and profiling to identify suspect requests, an approach that can prove effective in spotting anomalous behavior on an individual transaction basis but doesn’t provide broader context on incidents. That becomes an issue when dealing with more elaborate schemes that exceed the scope of one particular algorithm, which deliberately exploit the restrictedness of legacy policies in order to avoid detection.

Not unexpectedly, the increasing sophistication of attacks against financial institutions and individuals has made fraud detection one of the more important use cases for Big Data, with emerging vendors such as the recently funded Datameer eagerly rising to the challenge in pursuit of new growth opportunities. The company this morning announced a partnership with Trustev to harness Hadoop to fend off online scammers.

Trustev offers a real-time identity verification engine that focuses on the individual making the transaction rather than on the payment method with which they’re using, correlating transactional data with behavioral patterns from social networks to confirm that a customer is who they say they are.

Under the partnership, Datameer’s Hadoop analytics software will be used to enhance Trustev’s identity validation algorithms and make insights more accessible to business users through an interactive dashboard. The joint solution will be demonstrated at next week’s Southwest Interactive (SXSWi) Startup Accelerator Competition in Austin.

Datameer CEO Stefan Groschupf

Founded in 2012 and based in Ireland, Trustev has been named Europe’s Top Technology Startup by the EU Commission and one of Forbes Magazine’s Hottest Global Startups. “It’s extremely exciting to be working with one of Europe’s hottest startups, and know the impact this data-driven approach will have on the future of e-commerce,” said Stefan Groschupf, founder and CEO of Datameer. “Trustev is a prime example of a brand-new breed of companies that uses data to make the world a better place, and it’s great to be working with them to achieve their vision of a world without fraud.”

When it comes to fraud prevention, Trustev says they take a different approach for gathering data than their competitors, whose systems, Trustev says, mostly work on a ‘guilty until proven innocent approach.’ “For example, it is up to the user to provide enough information to verify their identity before the system considers them a safe bet,” Chris Kennedy, cofounder and Chief Technical Officer at Trustev, told siliconANGLE. “This can often lead to an excess of data being collected, or very customer-unfriendly processes, as they usually require a lot of manual input on behalf of the user.

“Using just one line of code, in the header of each web page, Trustev’s secure code sits in the background of the checkout process and watches out for suspicious activity—monitoring behavioral, transactional and even social data.”

Trustev has their own in-house data and fraud analytics team, whose members have come from companies such as Facebook, Microsoft and Symantec. Kennedy explained his company’s methods for applying advanced analytics to multiple data sources, including social data. “We use a series of proprietary algorithms that have been developed to analyze the data that we take in and deliver information back to the merchants in real time,” he said.  “The volume of data we deal with is staggering, even at these early stages. On a quiet day, we could be adding half a million records to our data platform for analysis.”

He added that Datameer’s system allows Trustev’s internal team to visualize all the data in real time, so they can quickly make decisions on modifications to Trustev’s algorithms.

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EU consumer privacy regulations

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Being a European company, Trustev has had to take into account strict consumer privacy regulations. “Even in the earliest days of coming up with the idea behind Trustev, we knew that the key to our strategy would be in how we handled and dealt with the end customer’s data,” Kennedy said. “Being based in the European Union means that there’s a very structured approach to data retention and security, so it gave us a very solid foundation to work from in terms of developing a data strategy.”

Trustev cofounder and CTO Chris Kennedy

The purpose of Trustev, he said, is to allow users to use their digital identity to verify digital transactions, without having to resort to outdated methods. He said it’s designed to let the end customer benefit from their digital identity by reducing barriers and making e-commerce flow more smoothly. “Beyond its value as part of our analysis, there’s no value for us in customer data,” Kennedy explained. “We don’t seek to retain or store it indefinitely for future possible monetary purposes. We think the problem with many companies’ approach to data these days is this instinct to retain customer data without any clear vision for what they’ll use it for.”

Kennedy touched upon how customer privacy regulations impact Trustev’s global reach. He said, if anything, being headquartered in the European Union has been a huge advantage to them in their dealing with companies in the United States and elsewhere. “The high standards applied to data protection and privacy in the EU have translated into high levels of confidence in our system and standards,” he said. “With data privacy being such a hot topic for many international companies, it’s now a huge part of any integration. And our straightforward approach to how we collect and manage data is often a key advantage in our dealings with international companies.”

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Maria Deutscher contributed to this article.