Global e-commerce fraud “growing and mutating”, reveals new study

BY Fraser Tennant

E-commerce losses to online payment fraud are growing and mutating, financially impacting businesses across the globe, according to a new study by Ravelin.

The study, ‘Global Fraud Trends: Fraud & Payments Survey 2023’, which surveyed 1900 global fraud professionals, reveals that over the past 12 months businesses have seen a huge leap in online payment fraud, account takeover, promotion abuse, refund abuse, and customer and friendly fraud.

As a consequence, businesses are spending more on expanding fraud teams in a bid to mitigate losses. Globally, three-quarters of all online businesses state that their fraud budgets will grow in 2023. In the UK, 62 percent of businesses will be spending more on managing fraud, with France spending 70 percent, Germany 74 percent, the US 69 percent and Canada 84 percent.

Despite this increase in spending, the study found that the funding and expansion of fraud items is only part of the solution, and new approaches are urgently needed to fight fraud and minimise losses.

“Over the years, businesses have built up fraud investigation teams which they are justifiably proud of,” said Martin Sweeney, chief executive of Ravelin. “But fraud continues to grow and mutate and simply throwing more people and money at the problem will not make it go away. Losses will continue to grow.”

When it comes to tools for tackling fraud, the study reveals that most businesses opt for in-house solutions, with machine learning and two-factor authentication two of the tools increasingly being adopted by e-commerce businesses to help with the issue. However, in-house solutions are expensive to maintain and quickly become unsustainable as a business grows, according to Ravelin.

The study also found that there is no singular ‘one and done’ fraud strategy that is most effective. Different solutions are effective at fighting different frauds, and having a robust tool stack allows teams to consider the complex nature of fraud.

“Businesses need to get on the front foot managing fraud: using automation to nip fraudulent transactions in the bud,” concluded Mr Sweeney. “Better automation helps teams scale and frees up fraud investigators from mundane tasks enabling them to focus on informing product development, identifying other sources of profit erosion, and other more important strategic tasks that drive growth.”

Report: Global Fraud Trends: Fraud & Payments Survey 2023

TPG to acquire Forcepoint unit in a $2.45bn deal

BY Richard Summerfield

Global asset management firm TPG has agreed to acquire Forcepoint’s global governments and critical infrastructure (G2CI) cyber security business in a deal worth $2.45bn.

The deal is subject to regulatory review and customary closing conditions and is expected to close in the fourth quarter of 2023.

Under the terms of the deal, Forcepoint’s commercial and G2CI businesses will be separated and will establish the G2CI business as an independent entity. The unit focuses on critical infrastructure for US government and federal agencies.

TPG will invest in Forcepoint G2CI through TPG Capital, the firm’s US and European late-stage private equity platform.

“It’s our mission to support the national security and intelligence communities by providing trusted, data-driven security solutions that enable them to collaborate and conduct mission-critical work securely and effectively,” said Sean Berg, president, global governments and critical infrastructure at Forcepoint. “TPG has a long history of carving-out, building, and scaling world-class cybersecurity companies. We’re confident that this partnership, along with continued support from Francisco Partners, will provide us the resources and expertise to strengthen our position as a partner of choice for government agencies.”

“Today’s operating environment – one in which data volumes are compounding, attack surfaces are broadening, and threats are growing in sophistication – demands dynamic security solutions,” said Tim Millikin, a partner at TPG. “This is especially true for the public sector, and Forcepoint has designed its platform to address the unique complexities of government objectives and culture. We’re excited to partner with Sean and the G2CI team to expand the platform and further its position as a leader in high assurance, zero trust security.”

“We are proud to have built an industry-leading portfolio of security products that protect government and enterprise customers’ infrastructure, people, and data,” said Manny Rivelo, chief executive at Forcepoint. “This transaction represents an exciting opportunity for the Forcepoint G2CI business to continue its trajectory of growth, delivering high assurance security to government and critical infrastructure customers worldwide. Similarly, it enables the Forcepoint Commercial business to further focus investment and innovation in accelerating growth of the company’s Data-first SASE platform, Forcepoint ONE, while delivering increased value to our customers.”

“Sean and the Forcepoint G2I team have been excellent partners and built a thriving business that will benefit from operating as its own standalone business,” said Brian Decker, a partner at Francisco Partners. “We are excited to remain investors in the business and partner with the management team and TPG to help it continue to grow and succeed”.

Francisco Partners, a leading global investment firm that specialises in partnering with technology businesses, acquired Forcepoint in January 2021 from Raytheon Technologies. Francisco will retain a minority stake in the unit going forward.

News: TPG to buy Forcepoint unit from Francisco Partners for $2.45 billion, Wall Street Journal reports

Bankruptcies boom in H1 2023

BY Richard Summerfield

Commercial Chapter 11 bankruptcies increased significantly over the first half of the year, according to Epiq Bankruptcy.

There were 2973 total commercial Chapter 11 bankruptcies filed during the first six months of 2023, a 68 percent increase over the 1766 filings during the same period in 2022. Individual Chapter 13 filings increased by 23 percent during the same period.

June saw a rise of 12 percent in overall commercial filings, with 2123 filings up from the 1891 commercial filings registered in June 2022. The 404 commercial Chapter 11 filings in June represented a 9 percent increase from the 371 filings in June 2022.

Bankruptcy filings for small businesses, known as subchapter V elections within Chapter 11, also increased 55 percent, according to the data.

Furthermore, total bankruptcy filings reached 217,420 during the first six months of 2023, a 17 percent increase from the 185,352 total filings during the same period a year ago. Total individual filings also registered a 17 percent increase, as the 205,313 filings during the first half of 2023 were up from the 175,094 filings during the first six months of 2022. The 85,390 individual Chapter 13 filings in the first half of 2023 represented a 23 percent increase over the 69,367 filings during the same period in 2022.

All chapters increased in June 2023 compared to June 2022, with 37,700 total bankruptcy filings representing an increase of 17 percent from the 32,198 filed in 2022.

Total commercial filings were up 12 percent from 1,891. Total individual filings were up 18 percent from 30,307.

“The increase in commercial and individual bankruptcy filings during the first half of 2023 underscores the economic challenges faced by businesses and individuals,” said Gregg Morin, vice president of business development and revenue at Epiq Bankruptcy.

Some of the most notable recent filings have included SVB Financial Group, Envision Healthcare Corp and Bed Bath & Beyond. An increasing number of companies is encountering financial difficulty as the global economy continues to fluctuate. The coronavirus (COVID-19) pandemic, the ongoing war in Ukraine, rising interest rates, inflation and increased borrowing costs have all impacted organisations significantly in recent years.

News: Commercial Chapter 11 Filings Doubled Over Same Period Last Year

Bausch + Lomb acquires Novartis’ eyecare portfolio

BY Fraser Tennant

In a deal designed to boost its eyecare portfolio, global eye health company Bausch + Lomb Corporation has acquired a number of the ophthalmology assets of Swiss multinational pharmaceutical corporation Novartis.

Under the terms of the definitive agreement, Canada-based Bausch + Lomb will acquire Novartis’ assets for up to $2.5bn, including an upfront payment of $1.75bn in cash, with potential milestone obligations up to $750m based on sales thresholds and pipeline commercialisation.

Novartis’ ophthalmology assets include its anti-inflammation eye drop Xiidra, experimental drug libvatrep for chronic ocular surface pain and the rights to use the Swiss pharma company's AcuStream dry-eye drug delivery device.

“This acquisition is a prime example of our strategy in action, as it provides needed scale for the company and transforms our pharmaceuticals business by making us a leader in ocular surface diseases,” said Brent Saunders, chairman and chief executive of Bausch + Lomb. “The deal is also expected to accelerate margin expansion through a larger mix of pharmaceutical products in our portfolio, provide strong and immediate earnings accretion and presents a clear path to deleverage, making it financially compelling.”

Founded in 1853, Bausch + Lomb has a significant global R&D, manufacturing and commercial footprint with approximately 13,000 employees and a presence in nearly 100 countries. Likewise, in its quest to find new medicines, Novartis consistently ranks among the world’s top companies investing in R&D.

“This transaction will enhance our focus on prioritised innovative medicines to alleviate society’s greatest disease burdens, achieve the greatest patient impact and drive our growth strategy,” said Ronny Gal, chief strategy & growth officer at Novartis. “Our ongoing portfolio refinement enables us to best deploy our scientific expertise and resources towards priority programmes and therapeutic areas, while remaining open to opportunistic development for additional high impact conditions leveraging our advanced technology platforms.

The transaction – which is expected to close in the second half of 2023 – has been approved by the board of directors of each company and is subject to receipt of regulatory approval and other customary closing conditions.

Mr Gal concluded: “We believe that Bausch + Lomb has the capabilities, scale and commitment to continue the work of Novartis in delivering and developing much needed therapies for patients suffering from dry eye and related conditions.”

News: Bausch + Lomb buys Novartis drugs for $1.75 billion to boost eye-care portfolio

Electric truck maker Lordstown files for Chapter 11

BY Fraser Tennant

Amid accusations that its investment partner Foxconn has reneged on its commitments, struggling US electric truck manufacturer Lordstown Motors Corp. has filed for Chapter 11 bankruptcy.

As part of the bankruptcy process, Lordstown has filed litigation detailing its description of Foxconn’s fraud and wilful and consistent failure to live up to its commercial and financial commitments to Lordstown, arguing that Foxconn’s actions led to material damage to Lordstown as well as its future prospects.

Under the partnership, Lordstown had agreed to divest its most valuable assets to Foxconn, namely its Lordstown, Ohio manufacturing facility, which is one of the largest in North America, along with its highly talented and experienced manufacturing and operational employees.

The Chapter 11 filing will also allow Lordstown to commence a comprehensive marketing and sale process for the Endurance all-electric vehicle (EV) and related assets, as well as provide a prospective buyer with a going concern asset that is free and clear of any legacy issues.

“As one of the early entrants to the EV industry, we have delivered the Endurance, an innovative and highly-capable EV with significant commercial and retail potential,” said Edward Hightower, chief executive and president of Lordstown. “We  subsequently engaged with Foxconn in a purposeful, strategic partnership to leverage this expertise into a broader EV development platform.”

“However, despite our best efforts and earnest commitment to the partnership, Foxconn wilfully and repeatedly failed to execute on the agreed-upon strategy, leaving us with Chapter 11 as the only viable option to maximise the value of Lordstown's assets for the benefit of our stakeholders. We will vigorously pursue our litigation claims against Foxconn accordingly.”

To ensure a smooth transition into Chapter 11, the company filed with the bankruptcy court a series of customary ‘first day’ motions to continue operating the business and uphold its commitments to stakeholders during the process. Lordstown enters Chapter 11 with significant cash on hand and is debt-free.

“While in Chapter 11, Lordstown will continue to support our customers,” concluded Mr Hightower. “We are grateful for the Lordstown team for their commitment and dedication to our vision and to our customers, suppliers and business partners.”

News: Lordstown Motors files for bankruptcy, sues Foxconn