A Million Monkeys at Typewriters Can’t Solve Fraud or Identity
In case you’ve been hiding under a rock in 2020… Credit Card Fraud went BANANAS. Reported fraud cases were up 72% and although the numbers haven’t been officially reported, the estimation is that credit card fraud crossed the $35 BILLION mark…
The why is pretty straight-forward. Pull out a card in your wallet… all of the stuff designed to keep cards secure: the chip, the CVC code, the signature, the innovative new magnetic strips… they’re all PHYSICAL. Now look at your Amazon purchase history and honestly ask yourself: “What the actual fuck did I buy last year?!?”
Yup. We all moved to a card-not-present world. And that’s a huge win for fraudsters.
But honestly, I don’t really give a crap about fraud because I don’t pay for it. Most of the fraud costs fall on small merchants. Mom and pop stores and restaurants that started taking card numbers instead of running cards. Sucks for them. But not for me…
I’ll tell you what is driving me NUTS. False positives. When my goddamn card gets cut off for no reason. I went to buy new standing desks for my wife and myself, because work from home appears to be a permanent state. And the transaction didn’t go through on my Betterment card. Then I had to spend a few days playing voicemail tag with their customer service and fraud departments getting it straightened out. Then my USAA card got shut off. Then my credit union card. What on earth is going on here?!?
Well, obviously, I’m a sketchy dude. I buy RANDOM stuff on the internet. And I don’t follow the same patterns of buying everything from Walmart.
But real reason has to do with the mountains of anti-fraud software that’s being sold to the payments industry. The core idea is that we can teach a machine to detect when a sketch transaction has been made and automatically shut off the card before it happens. Magic, right? No fraud, and only a slightly irritated customer.
Hmm. Well it turns out that it’s a WAY more expensive solution than the original problem. The estimate is that 2.8% of total transactions are false-positively marked as fraud. This translates to FOUR HUNDRED AND THIRTY BILLION DOLLARS lost… Yes, that number is BONKERS. Think about it for a second. I go to impulse purchase a diamond encrusted face mask and my card gets turned down and I’m likely not gonna pull out a different card and instead I'll just move on to a different way to numb out. Probably video games, but maybe a stiff drink. Oh… and I’ll put that card in the back of my wallet and won’t use it again. Sucks for the diamond face mask merchant AND sucks for the card issuer. Both of them lose.
We believe that machines can’t solve fraud without creating a bigger false-positive problem. That’s why we’re pioneering a way to just ask real humans if they made the transaction. It’s all done on a neutral network called Simple.ID.
Simple.ID - a more efficient way to impulse purchase diamond-encrusted face masks™