Memphis-based tech startup takes hackers to court

Online ads are a part of our digital lives. They’re also a billion-dollar-a-year industry and a hotbed for illegal activity.

Enter new ad tech security startup, DEV/CON DETECT. Founded in Memphis, DCD helps companies with a large online presence (think publishers and media houses) protect their sites, revenues, and customers from criminal activity.

In the simplest of terms, online ads can be hijacked. According to DCD’s CEO, Maggie Louie, with a few changes to an ad’s code, the money an ad generates can be rerouted. The tags that tell a website what ad to display can also be corrupted so that fake, parasitic ads get views and clicks. Bots can be sent to increase site traffic and generate even more revenue. Fake websites are then set up to filter the stolen revenue.

The result is digital money laundering to the tune of $9 billion in 2017 and a projected $19 billion for 2018 according to Juniper Research.

The inspiration for DCD came while Louie was working for a major publisher and made a surprising discovery. An employee had hacked their content management systems, hijacked their ad codes and embezzled nearly $1 million.

Louie noticed a gap in service providers. There were few people working to curb this type of ad fraud. Currently, the big industry focus is on traffic verification and making sure that visitors are real people and not bots, rather than a focus on the theft of the ad itself.

With a background deep in advertising technology and mobile product development, Louie partnered with Josh Summitt, a Memphis native and expert in cybersecurity. In 2017, they launched DCD, which now has operations in Atlanta and London in addition to the Memphis headquarters at Crosstown Concourse.

Louie worked previously with the Los Angeles Times, E.W. Scripps Company, Morris Communications and American Public Media, while CTO Summitt’s background includes leading Bank of America’s fraud detection testing and five years working with renown hacker Kevin Mitnick.

This blend of expertise is rare in the space and gives DCD a unique approach, Louie said.

“The [criminality] is fueled by the fact that it’s a highly unregulated industry, and there aren’t currently people or software that overlap from [cybersecurity] to the adware space that can remediate this,” she added.
An example of a nefarious online ad that can be used to launder money through digital channels.
“You can’t generate money off of a bot. You can accelerate the revenue, but you still have to have a method of payout. A bot only increases the traffic to the site,” explained Louie.

“You have to have a way to get the money from Point A to Point B, and that’s what we specialize in.”

Their expertise and strategy are working. Many of their clients experience at least a 30 percent increase in ad revenues after a system scrub from DCD. Clients under heavy attack have seen as much as a 250 percent increase in ad revenue once sites were restored.

“We are constantly finding new ways people are gaming the system, and it’s exciting and challenging to figure out how the hackers adapt their techniques over time,” said Summitt.

DCD’s novel approach recently won them a groundbreaking court case. They provided law enforcement with enough evidence to secure a conviction and four-year sentence for money laundering as well as an order to return the stolen money.  As far as DCD is aware, it’s the first-ever conviction for advertising fraud and money laundering via online ads and the first judgment to result in a payback.

“We are happy about his guilty plea and conviction a way better outcome than we would have guessed,” said the client, who wished to remain anonymous.

These cases can be notoriously difficult to prove because of the complexity of digital advertising.

“Try to explain to a court what’s going on. Try to explain ad tech and network advertising; try to explain that this cute, digital thing is actually a transaction platform,” said Louie.

It’s equally difficult to explain the industry to lawmakers.

And while judges and lawmakers might not be aware of the potential for online exchange, criminals are. There are a number of unbanked, anonymous ways to move money across the web. Online ads are a legacy platform in the world of digital money.

DCD isn’t just working diligently to make digital lifesaver, it’s also expanding.

In its first year, the startup focused on a capital fundraising campaign to help fuel their growth. They raised just short of $1.5 million from investors across the country, including locals Start Co., Innova Memphis, and the JumpFund for female entrepreneurs, part of Launch Tennessee.

They plan to use the money to expand their staff and launch a new program Louie says will be game-changing for the industry. Their goal is to grow from their current 11 clients to 100 clients in 2018.

They’ve also expanded their physical presence to include Atlanta and London, participating in
startup accelerators Engage and Techstars to launch those operations. DCD likes Atlanta for
its strong cybersecurity scene while London helps take their client search global.

Their biggest barrier to growth is talent, specifically training and retaining post-grad talent. Louis highlights Leslie Smith and Elizabeth Lemmonds of EPIcenter as well as Eric Mathews of Start Co. as people making a difference in the area’s tech talent. But that investment in talent is not enough.

“It would be wonderful to know that the accelerators in town had some budget not just to groom and sophisticate entrepreneurs and companies, but also maybe some kids coming out of college who might otherwise leave the city to go to other colleges, offering to teach Python or tech programs for post-grads,” said Louie.

Summitt would like to see more co-working spaces to encourage development of the tech community. “One of the things I was most impressed with in London was there were coffee shops and bars that were specifically for co-work and meetings. For those of us that work remote or just like to work outside the office, these places were great for creativity and getting people engaged,” he said.

But Summitt also sees a positive shift in Memphis’ tech community.

“I feel Memphis tech is on the cusp of being something really amazing … Even a few years ago I felt that many people were just biding their time to find work in other more prominent tech cities like Austin, Seattle or even Nashville. I think that tide has turned for Memphis with all the investment in the city and in part by the work done by Start Co. and ServiceMaster and many others to create a more startup friendly environment,” said Summitt.

Related: "As part of a national entrepreneurship tour, Memphis leads 'the rise of the rest'"

And while the startup has clients across the globe, Memphis remains an integral part of DCD’s business. They’ll be participating in the Rise of the Rest Seed Fund pitch competition when it hits town May 8th. The competition’s Spring tour will hit five Southern cities; the eight Memphis finalists will compete for $100,000 to grow their business and, in turn, the city.  

As Summitt said, “I love this city. I grew up here, I went` to school here, and it's one of the main reasons I’m keeping my [DCD] team here.”

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Read more articles by Cole Bradley.

Cole Bradley is a native Memphian and graduate of the University of Memphis. Cole's worked locally as a researcher and community engagement strategist and began contributing to High Ground in Jan 2017.