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Tens of Thousands of Fraud Attempts, None Successful

We always seem to hear about the successful fraudsters who cheated merchants, but we don’t often hear about the successful merchants in stopping fraudsters. ATMCASH is an online money remittance business that, since its inception in 2005, has been able to maintain fraud losses well below the expected rates for their high risk vertical market. This is a remarkable feat for any online business, but an even greater accomplishment in the money movement vertical, an industry that sees a persistently high number of fraud attempts while the costs of fraud prevention and fraud losses have driven many entrants out of business.

Tens of Thousands of Fraud Attempts, None Successful by: David Montague, The Fraud Practice LLC, 2011. ABOUT ATMCASH

Founded in 2005, ATMCASH is a money remittance business that specializes in serving the unbanked abroad. Enabling customers to send money online or over the phone while allowing recipients to pick up funds at any one of the 1.6 million ATMs worldwide, ATMCASH represents the 21st century solution to sending money, not requiring either party to step inside an office or branch. Leveraging the established ATM networks worldwide ATMCASH offers discrete pickup locations for recipients while making it convenient for senders to remit money from home.

Since the beginnings of eCommerce many have tried to improve on traditional money transfer services by allowing customers to send money online, but many businesses that entered this market failed. “Many people tried to get into the industry and then deal with fraud on the backend,” Jonathon Cooper, CEO of ATMCASH.COM explained. “But you don’t have the luxury to do so,” he went on to say. “The crooks will continue to steal from you until you stop them.” “This is how many businesses in the money movement industry folded up”. Sending money online, especially internationally, is a common way for fraudsters to move and launder money they obtained illegally or to steal from accounts they’ve taken over. Many online money movement startups had to close up shop because they couldn’t figure out how to control fraud losses or they couldn’t figure out how to do it and keep a profitable margin.

ATMCASH.COM core service allows customers to send money from their credit card, debit card or bank account to a recipient in over 128 different countries which requires a diverse anti-fraud strategy to be this effective. From the beginning, ATMCASH.COM took a different approach to fraud prevention; first they took the position that they wanted to design a zero tolerance solution and secondly they wanted to build as much as possible in-house to keep overhead low while ensuring maximum integration.

While ATMCASH can now proudly tout the fact they essentially have no fraud losses, it required a great deal of time, effort, planning and preparation to make it to this point. “It took a few years of serious and focused efforts just in the development and deployment stages,” Cooper said. “It was a very focused effort by very talented people over the course of a few years.” Cooper also described how ATMCASH “had to integrate with various vendors, work with various world class consultants and hire world class software experts.” One of the consultants ATMCASH worked with during the development stages was David Montague, founder of The Fraud Practice. ATMCASH had a clear goal in mind, to keep fraud losses very near zero, but came to The Fraud Practice to help make that goal a reality. After determining the tools and systems needed to achieve this ATMCASH faced the common dilemma many online businesses have: Buy versus Build. Possibly the single greatest barrier to entry in the online money remittance industry is the costs of abating fraud. There are many vendors with different point solutions that can be used, but buying and integrating these tools into an effective overall strategy is costly. ATMCASH was willing to commit the time and resources to build a completely internal fraud strategy, which has certainly paid off.

Since then ATMCASH has seen a lot of fraud attempts and has stopped them all. Cooper modestly commented how “the system is working quite well,” as ATMCASH has remitted millions of dollars and been able to stop tens of thousands of fraud attempts. But even after stopping the fraudsters tens of thousands of times, they’re still trying. “They never give up,” Cooper said, and as a business fighting fraud you must stay both vigilant and diligent.

Although this strategy has proved profitable for ATMCASH, an effective zero fraud strategy has known downsides and wouldn’t be appropriate for all businesses. One of the negative sides of any strict fraud strategy is false positives, rejecting transactions that would have otherwise been good. “This is one of the risks,” Cooper said, that “you might have to reject transactions because certain information can’t be verified.” In money remittance, where a single fraud loss can be very expensive and margins are relatively low, it is best to err on the conservative side. “But we are always focused on improving the customer experience,” Cooper said. While most business are looking for ways to decrease fraud without decreasing the customer experience ATMCASH strives to increase the customer experience while not allowing fraud missed to increase above zero.

The key to maintaining losses at such a low rate requires diligence. Diligence is important because the fraud landscape is always changing, and with regards to this Cooper shared two important tips. “It is valuable to have good industry contacts, there may be something going on in another part of the world that you should be aware of.” Cooper’s second suggestion: “Continue to look at the newest technology,” fraudsters continue to find new ways to scam while the fraud prevention industry continues to innovate, and staying up-to-date with fraud-fighting technology is paramount. He also discussed the benefits of using new technology to look at past results to recognize patterns or signals that may have previously been missed.

“You also have to stay vigilant,” Cooper says, “watch every transaction to see what people are trying.” He went on to discuss the pitfalls of thinking your system is fraud proof and how that mindset will only get you into trouble.


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