PayPal, Arkose to address fraud in loyalty redemption

PayPal aims to thwart digital shopping abuse by accessing Arkose Labs' suite of automated crime fighting tools.

PayPal is using Arkose technology at Honey, PayPal's shopping and rewards platform. Loyalty fraud is a growing problem for online shopping, with attacks jumping nearly 300% in 2020, according to Sift, which also reported a 60% increase in omnichannel retail fraud attacks.

Arkose classifies web traffic based on the users' intent, taking countermeasures that are designed to halt attacks in real time over several types of payment fraud.

Its platform targets account registration fraud; account takeover and manipulation of user credentials; web scraping malware; bots that add items to shopping cards to stop legitimate purchases; card testing and the use of stolen payment credentials; and the use of automated scripts to exploit enrollment forms.

PayPal paid $4 billion in 2019 to acquire Honey, a firm that at the time was earning about $100 million in yearly revenue, causing some to question the size of the deal. The service, now called Honey by PayPal, is a menu of tools that notify shoppers when prices drop for specific items in an attempt to find the lowest price. The service has saved consumers more than $1 billion over the past year, according to a release from Arkose.

Honey, which works with retailers such as Macy's and Sephora and with marketplaces such as eBay, has become integral to PayPal's strategy to improve the chance of its payments app and Venmo to be the top choice of shoppers for payments.

Since Honey's service encourages users to regularly engage to search for price reductions on e-commerce sites, there's a "check- in" effect that PayPal wishes to promote among its users.