Surging Internet fraud fuels Scottsdale firm’s tracking work

The growing threat of Internet fraud is fueling the rapid expansion of a Scottsdale-based company that uses cutting-edge technology to find and stop the perpetrators.

The 41st Parameter was founded in 2004 by Ori Eisen, who formerly battled Internet fraud for American Express in Phoenix.

The company’s headquarters was located at Raintree Boulevard and Loop 101, but recently moved to a much larger site across from Taser International’s headquarters in the Perimeter Center.

“Part of the reason (for the expansion) is the problem we solve is a growing problem, at both banks and e-commerce,” said Eisen, the company’s founder and chief innovation officer. “The sophistication of the crooks as well as the ability to launch attacks from across the world allows them to hide all over the world. So their skills require us to stay vigilant.”

In 2006, the national Internet Crime Complaint Center referred 86,279 complaints to federal, state and local law enforcement agencies around the country for further consideration. The total loss from all referred cases of fraud was $198.44 million, up from $183.12 million in 2005.

The 41st Parameter now has 80 employees internationally, including 40 in Scottsdale, and plans to continuing adding to its work force through 2008, Eisen said.

“We work with the top 10 banks now, and with very, very large e-commerce clients,” he said.

The company uses its technology to help clients detect fraudulent activity on their Web sites, Eisen said.

“Let’s say somebody in Indonesia got ahold of your name, credit card, address, and bought a pair of airline tickets from Indonesia to New York, business class,” he said. “All the information will match up ... but what (the airline) might not know is the personal computer might (be in) Indonesia instead of, say, Scottsdale. So we’re asking every PC .. ‘what language are you configured in,’ ‘where are you in the world,’ ‘what time is it where you are,’ etc. We can detect PCs on the Internet without installing any software on them.”

The Scottsdale headquarters mostly houses product development, along with some professional services, and marketing and sales functions.

“The Internet is very, very anonymous,” Eisen said. “We help alleviate that level of covertness to know at least what devices are coming there so (companies) can make decisions about what (they) want to do.”

Although progress is being made in the fight against Internet fraud, the growth of online trade means the net loss continues climbing each year, Eisen said.

“Unfortunately, the problem we face is ... if we rid the problem for Bank No. 1, they move onto Bank No. 2,” he said. “The crooks just take their business elsewhere.”