(Bloomberg) -- Socure Inc., an identity verification service provider used by companies such as Chime Financial Inc. and Robinhood Markets Inc., has agreed to acquire the fraud prevention platform Effectiv for $136 million in cash and equity.
Effectiv helps businesses coordinate fraud prevention tools from multiple providers. By acquiring closely-held Effectiv, Socure is seeking to become a one-stop fraud prevention shop for enterprise customers. The deal will add new capabilities to Socure’s product suite, including anti-money laundering transaction monitoring and know-your-business tools. The platform lets users perform tasks like authenticating a person’s identity when they call a help center or verifying that attempts to open a new account aren’t fraudulent.
“This ability to have a single platform that can write any rule, that can build your own models, generate any calculation on the fly and be pushed into production in real time has never been more important because fraud is moving so fast and is so dynamic,” Johnny Ayers, founder and chief executive officer of Incline Village, Nevada-based Socure, said in an interview. “Fraudsters are like water, they seek out your weak spots.”
Individuals lost $10 billion from fraud in 2023, a 14% increase from the year before, the US Federal Trade Commission reported. Criminals are becoming more sophisticated as technologies like artificial intelligence makes it easier for them to impersonate consumers and new forms of fraud are on the rise. Synthetic identity schemes, for example, occur when a fraudster combines real and fake information to manufacture identities and then opens new accounts or accesses credit before disappearing.
The acquisition is expected to close in November. Socure will likely compete more closely with companies like Alloy, a fraud prevention platform that works with fintechs and banks to manage onboarding, transaction monitoring and credit underwriting. Socure has raised $646 million to-date from investors including Accel, Capital One Ventures and Bain Capital Ventures. Its last known valuation is $4.5 billion, according to data on PitchBook.
(Adds the expected closing date in the final paragraph. An earlier version was corrected by the company to say the deal is an agreement rather than a final transaction.)
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