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What is the State of Online Commerce? LegitScript CEO Scott Roth Discusses Fraud and Payments Abuse on the State of Identity Podcast

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Cameron D’Ambrosi, host of the State of Identity podcast, sits down with LegitScript CEO Scott Roth to discuss tactics in identifying whether a company is trustworthy, and the future of the online risk and compliance space. Read an abridged, summarized Q&A of the conversation for key takeaways, or listen to the full interview by clicking the button below.

Where is LegitScript within the scope of the market, and what capabilities do you bring to your customers?

Scott Roth: I like to start every conversation with our mission as a company, and that mission is to make the internet and payment ecosystem safer and more transparent. The way that we do that, historically, has been through a suite of persistent monitoring solutions.

We have decided that we don’t just want to help identify bad things that might exist on the platform and help get rid of those. We also want to help stop bad things from getting onto the platform in the first place.

We recently announced what we call the LegitScript Onboarding Suite, which is a variety of different solutions to help do exactly that — identify risky advertisers, sellers, or merchants and help before those folks get on your platform and potentially harm the consumers that are using your services.

When you strip these problem sets down to their bare components, I think you realize pretty quickly this is about business identity, right?

Yes, identity is one thing. And that alone is extremely complicated. If you want to do something nefarious, you’re not going to go to your bank. You’re not going to go to Stripe or Square to say, “Hey, I want a payment processing account to sell drugs.” You’re going to go and say, “Hey, I’m starting up an online shoe store.” And then I’m going to use that web store, and the card-not-present processing capabilities to then process for this other website where I am selling drugs.

It’s one of those challenges where it’s the identity, and it’s also the actions that the business is taking. But then because of the internet’s scale, we’re talking about millions and millions of merchants engaging on all of these platforms. Not even to mention all of the different regulatory jurisdictions across the globe where you might be selling something. The problem just compounds so quickly.

On any given day, LegitScript is analyzing billions of data points for over 15 million of the most commercially active merchants across the globe. They’re folks who are advertising on search engines and social media platforms, selling on many of the marketplaces, and processing payments for their own websites. We compile signals from that massive set of data.

Scott Roth, CEO of LegitScript

Can you talk a little bit about the thought process behind how you decided to move into this onboarding focus posture?

There was a huge opportunity to try to identify some of these bad actors or risky actions before they happened in the first place. That is what we’re doing with the onboarding suite — combining both of those things. It’s an advanced technology designed to help search engines, social media platforms, e-commerce marketplaces, and payments companies make better decisions about who they let onto their platform from a third-party merchant perspective.

We have multiple different components that are a part of the LegitScript Onboarding Suite. One of those components that we’re building is what we call RiskCheck, which uses our 15 years of collective knowledge of analyzing the commercial internet. We can use signals from our massive set of data to say, OK, if we’re seeing somebody show up on your platform for the first time, there’s a pretty good likelihood that we’ve already seen them and that we’ve analyzed that business and we know what they’re up to. We want to give you, in as near to real-time as possible, all of the analysis and the signals that we’ve seen of that merchant over time so that you can build that into your risk scoring and how you think about whether or not you want to onboard them.

We’d love to hear some of your thoughts on predictions for the future of the space. In your opinion, what can we expect to see over the coming years?

I mean, obviously, everybody’s talking about generative AI and ChatGPT. I think that there is going to be this crazy proliferation of (fraudulent) content creation that’s coming because of things like that. Think about the ability to just go out and spin up advertisements or product listings or even brand-new websites. I think the toolset that the fraudsters have is so amazing right now that we’re all just going to have to stay on top of our game with how that evolves and what that looks like.

I also think that there is a massive wave of regulation on the horizon, and it’s going to create all kinds of different challenges and opportunities for the folks that are operating in this space.

We may see a huge evolution play out over the next 12 to 18 months that may have some pretty big ramifications on how people operate.


Hear the full interview for more on the future of the commercial internet: