The 41st Parameter Secures $4.35 Million In Series A Funding

SCOTTSDALE, Ariz., May 16, 2005—The 41st Parameter, the leading provider of anti-fraud and anti-phishing solutions, today announced it has raised $4.35 million in Series A financing. Norwest Venture Partners led the up-round, which will be used to expand product development, marketing, and sales. The company also announced that Venkat Mohan, partner at Norwest Venture Partners, and Champ Mitchell, CEO of Network Solutions, have joined the board.

Threats to e-commerce merchants, banks, and consumers are rising rapidly. According to Gartner Group, identity theft from phishing attacks cost U.S. banks and credit-card issuers about $1.2 billion in 2004. In addition, the Anti-Phishing Working Group (APWG) noted the number of unique phishing attacks it monitored rose from 116 in December 2003 to 1,422 in June 2004. The 41st Parameter helps merchants accurately discover, investigate, and prevent potential fraud threats.

“As business continues to proliferate on-line, the rise of fraud and phishing attacks threatens the very fabric of on-line commerce, and customers continue to lose confidence in the integrity of on-line transactions,” said Ori Eisen, the company’s founder, president and CEO, and former head of worldwide fraud prevention at American Express.

Current approaches to solving phishing attacks are very expensive, impractical, and ineffective and require the issuance of hardware “tokens” to end-user customers. Banks and financial institutions typically issue these tokens only to a very select group of high-net-worth clients, as it is impractical to issue them to the occasional credit-card customer. In contrast, The 41st Parameter has developed a patent-pending “zero imposition” anti-fraud and anti-phishing technology that requires no action on the part of the end-user customer and can be used for all customers.

“With its ‘zero imposition’ technology, The 41st Parameter is the only company that has developed a practical anti-fraud and anti-phishing solution that on-line merchants, banks, and financial institutions can quickly deploy across the entire customer base,” said Mohan. “Ori is one of the best known and most respected experts on fraud prevention, and I’m confidant that the technology he’s developed will be an invaluable tool in the fight against phishing and fraud.”

“Current anti-fraud measures make customers go through the hassle of taking multiple steps just to make an online transaction. Our solution fundamentally transforms the way merchants and financial institutions deal with fraud and identity theft because it enables them to identify legitimate customers transparently,” said Eisen. “Although we received interest from multiple investors in the venture capital community, we chose Norwest Venture Partners because we believe they are the best firm to help an early-stage company like us manage aggressive growth.”

The 41st Parameter has the industry’s most advanced fraud prevention system. Current solutions rely on reactive fraud analysis based on real-time anti-fraud measures, which can increase the number of false positives and reduce merchants’ sales. The 41st Parameter’s flagship product, FraudNet, works within the framework of the existing logistical time lapse between the transaction and shipment, providing greater accuracy and an increase in legitimate sales for the merchant. The 41st Parameter’s PhishingNet product allows companies to immediately differentiate between legitimate and fraudulent users and recognizes authentic users without violating customer privacy.