Preventing Fraud Through Collaboration: Insights from Brad Epstein from Prime Trust

May 30, 2023
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Preventing Fraud Through Collaboration: Insights from Brad Epstein from Prime Trust

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The Fintech Fraud DAO has now been live through Q1 2023. We have data for over 10% of the adult US population and 10 live members sharing data with the network. Further, we’ve been able to mitigate about $2.3M in projected fraud losses. 

To better understand how something like the Fintech Fraud DAO can be used to prevent fraud and why organizations should be open to exploring this form of data sharing, Unit21 interviewed Brad Epstein, Head of Financial Crimes Compliance at Prime Trust. 

Here, we’ll discuss:

  • Why Prime Trust decided to join the Fraud DAO consortium 
  • What they hope to get from it going forward
  • How they see collaboration as the future of fraud-fighting 

Let’s dive in.

Risk & Product Team Collaboration Hand Out


So you've joined the Fraud DAO Consortium, and we’d love to know what made you decide to join it?


The reasons that made Prime Trust decide to join the consortium are kind of twofold. So, first, selfishly, it is for us to be able to enrich our own data from other users of Unit21 that are also participating in the fraud DAO.

This will potentially help drive risk scores for particular users, as well as help prevent any fraud from occurring on the platform, hopefully before even transacting, right? If we can identify these things early on instead of reacting to them, it'll make life a lot easier for us.

And again, it helps enrich our own data that we're getting when someone goes through the onboarding process. We have some fraud indicators that are being highlighted, but to have data from other members that have classified things as fraud is a lot better and just enriches it so much more.

And I think the other reason we've decided to join is I think the sharing of information. Members sharing it within the consortium will strengthen the whole network. It will drive these fraudsters away from coming to other fintechs, right? 

So I think we are being selfish on one hand, but then on the other we're sort of like paying that back. And I think that's a very important thing and it's not something that is currently in the FinTech world. I know traditional financial institutions, banks. They have tools like ChexSystems wherein if customers write bad checks, they get put on a list and every bank has access to that.

Even though checks are a little bit of a bygone financial instrument, they are still used. That being said, a system like that just doesn't really exist for anyone in the FinTech space. So I think this is a good start in being on the ground floor or something like that could be really important.


As you were getting involved in the DAO, what were you hoping to get out of it? What made you and Prime Trust take the plunge?


As I mentioned earlier, the first one is helping us make better decisions in the onboarding process for our integrators, which is what we call our clients. We have a little bit of a different model than some other fintechs out there. We're more of a B2B2C, so we don't always have that direct link to that particular end user who may be a real person, who may be a fraudster, or maybe it's a stolen identity… We don't necessarily have that direct connection.

So, if we have these users come on that we don't get full information like device ID or an IP address, but we have another member of the DAO that's also had this particular end user show up, and we see that it's the same user and they've been reported as fraud, that is going to help us just make a faster decision.

Further, we can prevent that fraud from occurring before we're having to deal with the fallout from it, whether it's a prolonged investigation or someone now has had their banking credentials stolen and trying to help that person. 

Plus, we're also helping our clients here at Prime Trust remain safe. Some of them maybe aren't as mature or aren't as sophisticated, or maybe they're not even required to have any sort of anti-money laundering program or a fraud program yet. These are the kinds of elements that are going to make this attractive for Prime Trust to participate in.  Further, it will help our clients stay safe as well.


How critical do you think collaboration is for fighting fraud?

Yeah, this consortium will be very critical for fighting fraud. Information sharing between traditional financial institutions and fintechs is a very cagey process. We can share information through the 314 B process, between financial institutions, which gives us that legal authority or protects us. Usually you're not allowed to share that kind of information, right?

So the 314 B process protects the participants. There are some financial institutions out there that won't do it if it involves fraud, as 314b technically covers money laundering. You can sometimes run into a roadblock where you're trying to figure out something in a fraud investigation, and you submit a 314 B, and they don't allow it or won't respond to it because it has to do with fraud.

So, I think this is critical in turning that page on trying to be more proactive and open. As long as it's done safely - which so far with the fraud DAO, everything is private. We don’t actually see the data, we just know there is an overlap. This is beneficial to everyone that shares the information. As long as we're doing it safely, everyone can make the right decisions. 

We shouldn't be playing in an environment where we say, “Well, as long as it's not on our platform” - right? Because, it still means it's still occurring on someone else's. Especially, in the crypto space, there's that magnifying glass on everything right now. Best of all, its easy to leverage this tool - to help identify something to do with fraud, whether it's traditional identity theft or maybe some sort of scam.

So making ourselves look better and making it safer for the users of FinTech products, whether it is crypto or, or just traditional fiat currency, is beneficial to everyone to try and make it safer.


That's definitely the case, and that's why the collaboration part helps and that's why we're doing a lot around that - to get fraud not to be the F-word.

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