Episode 3: The cat and mouse game

In this episode, we dive into the often-overlooked realm of first-party fraud. While we typically focus on external threats, like identity theft and fraudsters, there's another side to the story. Many financial institutions find themselves dealing with fraud committed by their own customers. Whether it's individuals intentionally planning fraud or customers struggling with financial difficulties, this insider perspective sheds light on the multifaceted challenge faced by banks, credit card companies, and loan providers. Join us as we explore how these institutions balance resources and intent in the battle against fraud.

Thanks to Ashley Clements from Atlanticus (www.atlanticus.com) for the insights.
In conversation with Ravi Madavaram from Regulo (www.regulo.ai)

Transcript

Ravi: 0:00

Okay, welcome back, listeners. I have with me, today, who is about two decades of experience handling, fraud. I'm really excited to have him, on the call today, and I would love to know and learn about his experiences in dealing with fraud over the Es. Ashley would love to know a little bit about you before we go into the deeper,

Track 1: 0:20

So as Robbie said, I've been in the fraud space for almost 20 years. I've worn a lot of different hats. I started out as a rep nearly 20 years ago, back in 2005. I've really seen changes in the industry. I've seen the evolution of. Fraud strategies of fraud technology. And of course, the evolution of the fraudsters, which is probably,my favorite thing to talk about.

Ravi: 0:46

Oh, wow. So I would love to know, the evolution of fraudster itself because I believe, most of the industry, in my view at least, is playing a catch up game, to evolve And counter the frauds. And so basically the fraudsters have been in the driving seat. So I would love to know a little bit about how the journey of the fraudster has evolved over the years and was of the experiences in your early part of your career, and what are some of the stories from now?

Track 1: 1:11

So it's a real cat and mouse game, right? The credit card companies, the banks, the financial institutions, there's a cat, right? So the fraudsters are running and they're always a little ahead and we're just playing catch up. if you go way back to the early 2000s, the fraud space was very different as far as. The types of fraud that you've seen, especially on a, from a credit perspective back then the, there was less Internet, right? There was less Internet transactions. You didn't have card on file. You didn't have Netflix. You don't have Uber and DoorDash and all of those things. And counterfeits, those max drive counterfeits where they got you at the gas station or, an ATM machine that had a skimmer built in on it, that was the fraud. And that was the majority losses and where there was not recoverable funds over the years. The chip, right? That little chip you have in your credit card that mostly put a stop to counterfeit credit cards and debit cards. And, anything that Used to have a mag stripe on it that has a chip that you can't really counterfeit a chip at least at this point in time. I'm sure they'll get there. and there's things that can be done, but not, you can't just copy a chip. so the most of the fraud, at least from a card space perspective, has really shifted to card not present fraud, account takeover fraud and that kind of thing. Even, from an identity theft perspective. The tools that exist today minimize that. So your scary third party fraudster getting information on the dark web, at least from a physical card perspective, has been minimized to some extent. It still happens. Of course, there are still holes and that all depends on the technology of an issuer, but it's not what it was back then. And that's mainly education from issuers. It's technology. We know more about customer spending patterns and how customers apply for credit. So that's, everybody's very much more well educated and the fraudsters, they don't stop the shift. They go somewhere else. They're still going to get money. and there is more fraud today than there has ever been. They just do different products. They do different kind of fraud. They have their own new technology. It's a business, just like a bank is a business, right? There's, a lot of these larger fraudulent groups or whatever you wanna call them, they have qa, they have supervisors. That the guys at the bottom are getting they're getting reviewed based on how much fraud they can commit and how much money they can send up the chain. That's never changed and don't think that will

Ravi: 3:50

So I totally agree about fraud being a, I equate that to a startup, not like a large bank, but more like a startup, very entrepreneurial spirit and your nimbleness and your agility to. Find opportunities, a product market fit, so to say, even a, for a startup, that's a big thing. And that's one of the models that I totally believe in. And I also agree that, the customers and in general, the industry is also more aware of, fraud that's happening. and I also see the data, from F T C from last year, the fraud is growing at a 50% pace, and this is a pace that I have not seen before. It feels like that the fraud is accelerating. So even with all the education, it seems like accelerating. What do you think is happening that is contributing to having higher rates of fraud in the=latest years?

Track 1: 4:39

to some degree, the newer companies your startups from a financial perspective aren't putting the money in it yet into fraud as they're trying to get big. They're trying to open up accounts. They want to make their own footprint and deciding what their risk appetite is. Sometimes they don't decide that till after it happens. Not to mention Some of the larger companies, the profits are going up. So the amount of fraud that is happening from a percentage wise can become more acceptable, right? It's all about the accepted fraud at a percentage of your profits, at a percentage of your sales. So as your sales go up your allowable fraud goes up too, and more of it happens, right? So even though to say fraud is going up year by year, What does that mean? Exactly. Is there sure there's more fraud occurring, but there's more sales occurring to so just by putting a number out there of fraud, That's a little bit of a not true number when it's put out there to scare people or whatever, right? There's more people on the earth. There's more accounts open, there's more money in bank accounts, more fraud occur. So what is that? As a percentage of the overall growth of these companies with the overall sales or profits or however you want to calculate it.

Ravi: 5:51

Okay. So what you're saying is basically the growth at which the overall financial services industry is growing is far higher than the fraud itself. Is that what I'm hearing?

Track 1: 6:00

don't know if that's true. I'm just putting that out there is asking the question, when you say, oh, fraud's at an all time high. Yeah, but so are sales. Really, when you want to talk about fraud, you want to look at that as an overall percentage of profits or sales. Or account because they continue to grow. But on top of that there's recovery from a financial institution. There's some degree of recovery and standards change, what may have been acceptable as a fraud rate 20 years ago may have gone up today. As people are expecting more fraud you want to get more accounts that helps your stock you want to approve more customers. It helps the customers. It helps you. It's very possible some of these companies are just allowing more. Because you're saying, oh you know what, I want this many customers. I'm willing to accept this much fraud. You loosen up your rules a little bit. And not to keep going on the long, long spiel here. But a startup that wants to get its foot in the ground may say. That's Okay. We'll take all this fraud. We'll invest in technology later once we've, established ourselves and at the end of the day, those percentages will even out.

Ravi: 7:13

Okay, good. So you talked about the difference which is a neobank with, are we a large card issuer, like a MasterCard or a Visa, right? I'm trying to understand the difference between fraud as a business object. You, or what are the KPIs that companies look at in a company like Neobank? Would it be different? The approach to fraud? Would it be very different? Let's say, because there are current neo banks, which are series C, series D, there are companies which are series A or earlier, right? So I can understand in the earlier stage of the business, you are trying to prove your product market fit. But post series C, series D, you want to protect your business, right? I do want to understand what is the perspective. In approaching fraud, what are the kind of KPIs that these companies look for? Vis a large company?

Track 1: 7:56

every bank, every financial institution, there's not a whole lot of information sharing from bank to bank. Really for any company? You are reinventing the wheel when you attack fraud, right? And it's important to bring in people with experience, someone who's worked at another company. Because the knowledge base from one company to another can vary widely. You take a company that doesn't see the same type of fraud as a company that sees a lot of different types of fraud, right? Those controls aren't necessarily in place. It's all about having the right controls in place. There's no stop the fraud button. There's no product that stops it. It's about having the controls in place before it happens and reacting when it happens. One company's customer base may be wildly different than, company number two's customer base. So customer two opens up a new product. That, maybe company one has had for years. So you don't think this particular fraud is going to happen. For instance, a prepaid debit card. Those were all the rage back in the mid 2000s. There's not a whole lot of those left, right? There's a couple of your main ones. But there's not startups coming out left and right to give you prepaid debit cards. If there was money in it, if there was still stuff to be figured out, they would be popping up all over the place. And the idea with the prepaid debit cards are there's not going to be fraud on this product. You have to put your own money on it. How could there be fraud there? And that actually is the worst, fraud product. That exists because of all the avenues of fraud that you can commit. If you haven't seen it before, it's easy to think that it can't happen. So a lot of companies, I think it's just new. And they're just brainstorming from scratch on how to stop it. If you don't have these outside. consultants or people who have actually seen it or actually know what can happen. If there's a hole, the fraudsters will find it. So if it exists, somebody's going to get it. Maybe not six months from now, maybe a year when someone finds that hole, but if it's there, they'll eventually find it.

Ravi: 10:13

Got it. Got it. So you talked about a few things here. One was about reinventing the wheel itself. I do want to come back to that question itself. I do want to understand one part. I remember having a conversation with one of the fintechs couple of years ago and his biggest worry, and I was asking him, what's the biggest worry that keeps you up at night? And he talked about fraud being his number one priority. It was a digital lending company. Which was doing very small time lending the product was a small lending with a very small tenure as well. And what he was talking about is my biggest worry is my product is so seamless that people can come in and avail the product in real time and automatically. And so if I have a hole in the system, if somebody figures it out by morning, I am worried that my bank could be emptied.'cause it's a lending product, right? And he was very clear about, I'm not really worried about credit risk if somebody's not paying me half$500. I'm not really bothered about that. That doesn't keep me up at night because we have models running for that. What I'm more worried about is a hole that is found. We have not seen it, but somebody has found it. And by morning they have talked about it. Because there are blogs where people talk about how they fraud. Companies, right? And so by morning my bank is empty. So that was his biggest worry. And I don't see that kind of worry in larger companies because larger companies in general are a little more inefficient and that inefficiency helps in fighting fraud as well. And so I want to understand it feels like a lot more desperate for smaller companies than larger companies. I see in larger companies, you're talking about fraud. Loss vis-a-vis profit and you have a ratio. If it's not about that, the top line is not bothered about it. So I wanted to understand this particular difference in small companies. Is this something that we can help? And is this something that you observe as well?

Track 1: 12:05

Absolutely. In a smaller company or in, a medium sized company that doesn't invest, As much into the fraud technology, you invest more into your overhead, into your people. So it's a lot easier, and it's really just by necessity that you have more eyeballs on what's actually happening, right? Even the smaller, medium companies, their goal is automation, right? That's where they want to be. They want to have as little human interaction with the process as possible. The downside to that is nobody's looking. That's the upside to your smaller companies. I don't have the money to spend on a 100, 000 a month, fraud platform to look for this stuff or have the computer find it. So you have manual intervention. Fraud occur, and maybe you just build manual reports that would find what you've seen. You do that, you have more fraud that you haven't seen, you revise, and you have. Eyeballs on everything. So when something happens, you see it. And on these exception reports, exceptions to things that you haven't planned for. And when you get a little larger, there's less eyeballs on it. You can still have those exception reports. You can still look for those exceptions and you certainly need to. But when the volume is a billion accounts or a billion transactions.

Ravi: 13:22

Yep.

Track 1: 13:23

I couldn't even contemplate on how you would possibly manage that, for what you said those little things. And maybe they don't care. Maybe they don't care unless they lose a million dollars in a month because profit is what it is, right? It's a percentage of. Your overall sales. So maybe a million dollars to lose. It's okay. Maybe you don't care until it's 2 million.

Ravi: 13:44

It.

Track 1: 13:44

Smaller company might care when it's 10, 000

Ravi: 13:48

Yeah. Okay. So also you talked a little bit about, how one single company not knowing what is happening with other company and you need people coming from other companies to tell you about what are the kind of challenges or the kind of fraud that the other company is seeing. Right. trying to understand here, is that the only way that we can learn from others' mistakes, Or other fraud that we have seen. Is there better ways to do this?

Track 1: 14:13

networking is the way to do it. And even in, something linked in. There's not a whole lot of digital networking platforms that people take seriously. LinkedIn people take it seriously. These days you get jobs through there. And it's basically turned into Facebook for corporate America, right? But interesting stuff on linked in. There's a line where as a fraud person, you don't want to tell the fraudsters, you know what they're up to, right? You don't want to tell them how to evade, fraud investigators or fraud processes. So it's not like you're going on there and just posting stuff online about that. But the networking aspect, it's important that, you can call a person, and say, Hey, what do you know about this? I'm seeing this occur. We have fraudsters, doing this hacking into our online accounts or whatever. But there's not a handbook of best practices. If you want to learn about management, you can go to Barnes and Noble or Amazon and there's a whole section of it. There's not a whole section of preventing fraud. And again, you don't want to put it all out there on how you do it. It's out there, but you have to go look. And especially in a smaller company, you only know what you've seen. You only know what you've read about and how much is out there. To your point, there are blogs. For fraud, prevent prevention and fraud investigators too. So that's, some, something important to be a part of or at least go look or at least know where to look or what questions to ask. But if you haven't seen it, you might not believe it when it happens. You might, no, they're not doing that. They're not our customers are, reading off our O. T. P. S. To the fraudster. Why would they do that? They do it all the time.

Ravi: 15:55

Yep. Totally. I agree with that. I also noticed that there are quite a bit of false positives when you also have, even with expensive solutions as well, even with machine learning being there, I still see quite a bit of false positives a problem statement that I see from fraud analysts. So is that a prevalent problem or is there a way to counter the false positives that are generated by these fraud monitoring

Track 1: 16:18

It's a large problem. That's all business you're losing, right? Just the friction. Even if you know you have a mitigation solution in between, say, approving an application and looking at it, right? Making a simple purchase off the Internet. How often do you go to buy something off of the Internet? That's an impulse purchase. And For me, I'm going to buy some goofy thing. I just saw had advertised to me on Instagram or something like, Oh, that looks cool. Oh, but they don't take Apple pay my credit cards in the other room, and then I don't make that purchase because that amount of friction stops me from making that purchase, right? How many people, but if it has Apple pay, Oh, all I got to do is click my phone button twice. Cool. I just made that purchase. I'm going to buy something that I'm going to use for five minutes and put in a drawer and forget exists, right? The same is true from the, a credit perspective, right? I may be financing something. I may decide to take out a loan. I may be going to buy a product and that little bit of friction. On that impulse purchase, and let's be honest, most of our purchases these days on the internet are our impulse purchases, right? Not necessarily stuff we need. With fun stuff. Interesting stuff is what we're purchasing. And that smallest amount of friction there can stop that purchase. And that's a lot of money being lost over the entire piece.

Ravi: 17:41

Okay. So from a, the false positives from a client's perspective from the fintechs or a bank's perspective, how are these dealt with? I'm, so the way you answered it, I'm assuming that the false positives or the alerts that are generated are cleared in real time, right? Or. The transaction is held until these are cleared, but sometimes it happens post the transaction is happening as well.

Track 1: 18:02

Correct.

Ravi: 18:03

Okay.

Track 1: 18:04

There's a lot of manual review involved when you get there. And that's all about the particular company and how they want to do it. If you look at, a regular customer a regular customer decides that they're an adult now and they need an adult email address, right? When they were in college, their email was cool guy for 20, a gmail dot com. And now they're an adult. So they need to go. Create a Gmail address that has their name on it, right? All of these email addresses are looked at and said, Oh, when was the last time you, Robbie, created a new email address, right? Probably a long time. I've had the same one for 10, 20 years. A new email address the Frogsters love, right? They're going to try to establish their email, but it might not necessarily be connected to Robbie, for instance. So when the credit card company looks at that's a flag. You get a new phone number because, you just get a lot of spam calls at that, at your phone number. And you know what? You don't have enough contacts that it's worth it. You're going to go get a new phone number. That phone number takes a minute to show up for you. That, you start running LexisNexis or any of these phone number searches. Oh, that's a new phone number. We don't trust this consumer. We may outright decline it, right? We may want to do a manual review of something like that But that's just the customer's actual activity that just looks like a fraudster,

Ravi: 19:32

Yep. So I also see the other side of this equation, right? And I'm spending a little bit of time here because I see when I'm researching about some of the neo banks, some of the biggest complaints. In the app, for example, apps have comments and reviews, right? So some of the biggest common complaints that I see there is, my account has been suspended because it was suspected fraud and I'm trying to get back access to my own account and it is taking a long time. So obviously I'm assuming that one of the high risk activity or high risk event, like a phone number change or email change has happened. Somebody attempted it and it was flagged and was probably suspended. So I'm trying to see what is the best balanced I'm sure these activities are done by genuine customers as well, and also is done by regular customers as well. So while we. It could generate alert right for both of the cases because it looks similar. How do we make it less friction for genuine customers who are actually genuinely trying to do that?

Track 1: 20:32

I don't know if you can it's not a it's not an exact science Robbie, you're you're trying to decide how many customers of yours. Are you okay with inconveniencing? Balancing that with the fraud because they don't know it. It's all of these systems, right? And no matter how good your fraud tools are, somebody is going to beat it. So are you concerned with only, we're not going to get beat by the low tech fraudsters and we're okay with getting beat by the high tech fraudsters, right? It's just that balance. We talked the other day and, there. All of these voice recognition tools out now where they say, Oh, you know what? We can verify your customers by their voice. So that, hey, there's no fraud there. AI can now recreate your voice by just a couple words. I could call you up, Ravi, and say, Hey, Ravi. Get you to say five words, hang up on you, and now I have your voice, right? And that's Not worth it for someone's account that doesn't have a lot of money. It's worth it for someone who does,

Ravi: 21:36

Yep.

Track 1: 21:37

Those tools Aren't owned by the low level fraudsters. They're owned by the high level fraudsters and five years. Now probably a year Your lower level fraudsters will be able to do that if they're looking for automation, too So if they can automate that ten times they can call Bank of America 10 times at the same time. Get your voice on there and drain your accounts, right? They can phone numbers. Now it's now your low level fraudsters can do that. 20 years ago, it was a little more difficult, but now you can do it,

Ravi: 22:14

Yeah. Okay. On a related note, on the same aspect of customer experience, right? Most of the time when somebody is product themselves as a customer they reach out to. The client or the financial institution and say, my account has been frauded or somebody has taken all the money, or the company themselves have called. And most of the time it's a mix of. Challenges happening, or not challenges, but problems on the company side as well as some things that the customer also has done. For example, you talked about people giving out their o a P to other people, right? So there is always responsibility on both the sides, and most of the time as a company you don't have a face. And so it is easy for people to blame you as a company that you know it is your problem. You have a lot of money. Why don't you make me whole? So how do you handle in

Track 1: 23:01

They say that exactly. They use those exact word.

Ravi: 23:04

So how do we handle this kind of situations? How do we, because on one hand you could come in and say, it's your problem. I have logs in my tech to show you that the problem happened on your side, right? While you may win that battle, but you may lose the war, right? If it happens too consistently and you end up losing trust with your customer base itself, right? So how do you balance this requirements from customers?

Track 1: 23:30

In that case, the customers? are right. It is our problem. That's the financial institution. You might Push back a little bit just from someone being so honest and real. But at the end of the day, look, that's true. They're right. It is the responsibility of the customer. It's easier today because more customers are educated and they expect that, they aren't as aggravated. Some are as they were 20 years ago when their card gets declined because and, especially with the advent of text messaging, you. Technology and I can text somebody and say, Hey, do you do this? They almost expect it, right? If you go and spend 1000 at walmart or something, and you never do that, you are not surprised when you get declined or you get a text message or a phone call. That's not true of all consumers because all consumers are not educated. So you just Have to be nice and deal with that. And, you might get chewed out by a consumer that doesn't like that, but that, that just is what it is. The harsh reality of that is well go to another bank. It'll happen there

Ravi: 24:33

Yeah. So I've seen some customers also, doing this jumping ship and then coming back and then jumping ship again. So I've seen some customers doing that back and forth journey as well. So I also see one specific community, which is the fraud, basically the older people about the age of 60. While education may be happening to the general population, The incidence of fraud on the older population is generally a lot more higher, if I remember my statistics correctly. Almost 60% fraud is targeted or happens with the people who are aged 60 or more so in that case, right? Because they're generally also not in line or not in sync with the technology changes as well, it becomes very hard to even blame them

Track 1: 25:16

Oh, ab absolutely.

Ravi: 25:17

right?

Track 1: 25:18

it's, just that technology has passed you by so much and you're not on the internet all day reading articles about scams and seeing all of that happen that you just don't get. Expect that, the Social Security Office calls you about your number being compromised. Sure. That's why would someone call and say that it's a little weird that they're asking you to go to Walgreens and buy a gift card, but you don't understand technology. Maybe that's what they do

Ravi: 25:49

Yep. Totally. I mean that, how do we fight this kind Is there a way is there a best practice that you've seen after working with multiple companies? Is there a way that we can stop this?

Track 1: 25:59

It's like you said, you're the war is going to go on forever and you can win battles, right? Education is the best, educating your parents is the best as someone with some elderly relatives and my elderly relatives are smart, right? But it terrifies me because this happens to smart people all the time. You hear these stories and you think, oh, that'll never happen to me. These people are just not real bright here. But let that happen when you are in the middle of a stress of another stressful thing when you hear these stories about people getting ripped off by the Social Security administration scams or giving out their information on the phone. Somebody calls them while they're cooking dinner. They've got, they're trying to make spaghetti. They've got, their noodles are boiling over. They've got garlic bread in the oven. That's gonna be, if they don't take it out at the right time, it's gonna burn. Their spaghetti sauce is boiling. They've got a, they've got two kids screaming in the background. You are not focused on your conversation if you answer the phone, right? Your brain is in seven other places. And when that happens, it doesn't work 100% in every direction, right? It's... If you're having a fight with your spouse and somebody calls in the middle of it and it's your credit card company and they need to know the last four of your social, your brain isn't working at full capacity. Maybe you just, spit it out and then 10 minutes later, after everything has calmed down, wait a minute. That was weird. Oh, crap. And then by then you realize you've lost some money. Some accounts have been opened up in your name. You've handed out information that you shouldn't have handed out. Because it's social engineering. It's psychology being used against you by the part of the fraudster.

Ravi: 27:44

Yep. Yep, totally. I totally agree with the fact that, believing that it doesn't happen to me is not something that is, so for example just to give you an example I always believed that I was smart enough to figure out if somebody was trying to fraud me. So this was, I think probably 2020 during the middle of Covid. I was living in Singapore and I had just. Changed my internet service provider. And I was like waiting for the internet service to be activated. So I was expecting a call to come in to tell me that it is activated, right? And I was traveling and I was like, not even stressed by the way. I was like normal. It's just that in my back of mind, I'm expecting a call. And then suddenly I get a call saying that, I see unusual activity in your account da dah. And I'm like, huh, that is weird. I just got my internet installation ready because I didn't even suspect that to be fraud because I was actually expecting it. Only three, four minutes into the call that I realize that. This was actually fraud because they started asking me to go to my computer to go to my ms config to actually set something up, right? So that's when I realized that this probably is fraud. But when I realized, and I've, by then I've been tracking fraud for almost three years already. And then I realized that it's a coincidence of things that actually brings together fraud. It doesn't mean education alone. It means circumstances as well. And as you really pointed out it can be stress, it can be many other things. This also reminds me of my airline analogy. So I came from the aviation background. There I. A crash or an incident doesn't happen because of a single incident. Only when you have few things aligned together and have a hole at the same place will it actually eventually lead into a fraud. And you can't actually predict it because aviation is a very regulated in this for almost 50, 60 years and you still have incidents happening every year. So that's one of the agreed methods that, how people find a whole. My example was perfect because two things unrelated but happened and then eventually I could have frauded, but I was not thankfully fraud itself, right? So I totally agree with that. So I do want to go back to one of the things that we were talking about before was about, each company, each. Financial institution is essentially reinventing the wheel and we are not actually fighting this together. Right. there better ways to fight fraud and fight fraud together? Essentially,

Track 1: 30:03

Probably and I would bet a lot of people in the industry would say, but I don't know what that is. think that's the reality. They might not want to admit that, but I think that's the truth, right? Because. We all have such different types of business. It's really easy when you're in a type of business and. Other companies are doing the exact same thing. And if you know somebody and you can call them and you can go to a conference. To me, it's the networking aspect. It's going to a conference, finding someone you have something in common with. Hopefully they have more experience or if you do, pass it down. But there's not a best practices manual out there for your business

Ravi: 30:41

Got it. Got it. I also wanted to understand a little bit about tech as well. And you talked about this, that how tech has transformed the years. I do wanna understand how tech can help or also how tech can enable fraudsters to generate more fraud behaviors, basically. So I wanted to understand what is a play role of tech in this whole ecosystem?

Track 1: 31:03

So probably the best thing is verification. From a technical perspective, that's what we can check. If you think 20 years ago, there just wasn't as much information out there about you, right? It was a little harder to get. It wasn't as accurate and hey, it's still not all that accurate. But now at least I can, say, check your email. I can check your IP address. I can check your phone number and see how long you've had it. There's a lot of that, but like I said earlier, with customers information changing you still have false positives in there. I think from an application perspective, to some degree, there's less fraud in certain products and more in other products. It's just very specific to that product. If I'm mailing you a physical card... Where is that card going? You have to have that physical card to commit the fraud, if that's the case, right? So there's a thing in there that the fraudster has to do if you don't have a physical card or a, and you're able to just make an application online. I can get a V P N that says, I'm where you live, but some companies have systems that can tell you if you're using A V P N and if you are using a V P N, maybe you're at the office. Maybe you're just at work using your work can and you're should be working, but you're shopping instead, right? All of those, that's to go back to your false positives. There are there is so much things that can consumer can do that mirrors a fraudster. And that's helps the fraudsters and it hurts consumers at the same time. But that's. That's the environment. It's just tough.

Ravi: 32:44

Yep. Okay. Got it. Got it. I also realized that I know you've been in this space for 20 years, right? I would love to understand, what makes this space so exciting for you as a person, right? 20 years, I have never stayed in a company that long. What kind of motivates what's fun about this particular industry?

Track 1: 33:04

Robbie, I like to be surprised. I like to see something I have never thought of before. If it's, if I watch a movie and I can predict what's going to happen, it's boring. Five minutes into it, you know how it's going to end. You know how the plot is going to go along. That's not a very good movie.

Ravi: 33:22

Yep.

Track 1: 33:23

my, favorite movie, and I don't know if you've ever seen this, is The Prestige.

Ravi: 33:27

Yep, I have,

Track 1: 33:27

and I walked into that movie because I was bored. I just went in within the theater and I didn't think anything of it. I thought, Oh, magicians, and I just was like, did not see the twists coming. And that to me, that's my favorite movie simply because it fooled me.

Ravi: 33:44

Yep. You could not guess if bail was a, was two person or a single person.

Track 1: 33:48

Don't give it away. Some people haven't seen this.

Ravi: 33:50

Oh, sorry.

Track 1: 33:54

But right. I like to be surprised and that makes me excited, to see, every day is something new. So much of fraud, it's, you can only be so ahead of it, right? You basically have a lot of baseline rules that work to catch your basic stuff. And from there, you have to be on the lookout for new stuff, right? So you are playing Catch up to some degree and you're always going to be doing that because you have to see it happen to even know that it's going to happen. To find a new type of fraud or to find out, wow, they're doing this, whoa, that's really cool

Ravi: 34:30

Yep.

Track 1: 34:31

Like that happen.

Ravi: 34:31

It probably is also accelerating to, it's also a really, as you even started out with that phrase cat and mouse game, and you're always. Learning new So can I understand how did your journey start? You currently are leading a fraud team you understand your journey?

Track 1: 34:47

I worked in a retail job prior to coming here or getting into the industry. And this was in the late 90s, early 2000s. And basically, this was in the days when people wrote checks. So people would buy things, they'd write you a physical check for an item. And there was a lot of fraud in that. And I was really good at catching that. I learned a lot of it, not on purpose. I didn't go in there and say, I'm gonna do this. But I saw what they did. The distractions, the things that Modern fraudsters do one to one person basis, right? Just like when we were talking about the caller fraud and that kind of stuff. Somebody's writing you a bad check and I'll tell you a story. One, I was standing at the cash register and I was 18 years old. I was just staring off into space. 18 year olds, right? What do they know, right? I didn't know anything. And these two beautiful women come through my line. Beautiful. Eastern European, they had Eastern European accents, and they're buying a big stack of CDs and DVDs. People bought this back in, the year 2000, nobody buys that stuff now. And they were all expensive. 20 for a CD, And they're buying stacks. And these two beautiful women write me a check, and then one of them says to the other, Oh my, in his Eastern European accent, my diarrhea is so bad today. Oh no, I don't know if I can make it to the bathroom. And I'm, this really happened, and I'm standing there and I go, And I take that check from her real quick and I run I want to get them out of my line as fast as possible. This is disgusting. And just as I run the check and I pick it up, I see there's some whiteout on

Ravi: 36:41

wow.

Track 1: 36:42

So they've whited out some of the numbers because those old check tools only look for bad numbers in their system. So if you cover up a couple numbers, that wasn't in their system. So I just said their check was not declined, but I didn't push It through yet. I didn't hit the enter button on the keyboard and I just said your check was declined. And I go, okay, thank you and snatches out of my hand and run out the door. And that was my first experience with that distraction. And I was just like, enamored with that. I was like, wow, they were beautiful. They told me something gross. And they almost got me. And I was, that was, I just found that fascinating.

Ravi: 37:25

It sounds like a fast love Basically. It sounds like the whole scenario that you are falling in love with the industry itself, right? It seems fascinating in itself, right? Yeah. So more or less what I wanted to discuss. Any, anything that you want to share from the fraud industry itself? Any stories that you have come across to the audience itself?

Track 1: 37:44

Yeah, I want to say, going back and you're talking about your friction, your rules, your false positives. First party fraud is it is a really big thing, right? Like we're talking from the perspective of the bad fraudsters, stealing your identity, you're taking your money, but something always to keep into account from a financial institution perspective, a lot of fraud is committed by the consumer, especially in kind of we want to open accounts real quick, right? If you are with a bank and you have your mortgage there and you've been a customer for 20 years, you're probably not going to commit first party fraud. But these accounts, these companies where you don't have these deep relationships with, there's such a problem with consumers going into it. Either planning on committing fraud from the get go, right? I read on the internet how I can buy all this stuff and then tell the company it wasn't me, it was fraud. You have so much of the, I didn't pay that credit card bill because I was in a bad position or whatever, looking back and going, I bet I could just tell them this is fraud. So the credit card company your banks your loan companies, your retail financing, they are not just fighting your bad guys, your third parties, your identity thefters, you also got to keep an eye on your customers, right? And you only have so many resources. Not only do you have to say, did the customer do this? But did the customer do this and did they intend to?

Ravi: 39:14

Yep. Got it. Thank you. Thank you so much. Actually, thank you for joining podcast today. And we would love to see you again of the time. will continue to do this podcast itself, and thank you so much. listeners for to the podcast. Please do subscribe to our and also like our company page on LinkedIn.

Track 1: 39:31

Thanks everybody.

Ravi: 39:32

Thank you.