How Cardless Prevented $78k of Transaction Fraud In 2 Months
As a leading fintech startup, Cardless offers consumers virtual credit cards for seamless online and in-store purchases. However, with speedy growth comes heightened fraud risk that can quickly spiral out of control.
How Cardless Prevented $78k of Transaction Fraud In 2 Months
As a leading fintech startup, Cardless offers consumers virtual credit cards for seamless online and in-store purchases. However, with speedy growth comes heightened fraud risk that can quickly spiral out of control.
Use Cases
- Customer Onboarding
- Real-Time Payment Fraud
- Case Management
- San Francisco, CA
- Card Issuing
Challenge
In Cardless’ early startup days, the company rightfully focused engineering resources on aggressive platform development and customer acquisition. With limited time and capital, building a custom in-house fraud solution was the most logical initial approach.
As Cardless Risk Analyst Elizabeth (Liz) Young explained, their previous in-house solution required messaging engineering teams to manually create fraud prevention rules when they found the time.
“Without Effectiv, we had no real-time prevention of fraudulent transactions. It took our engineering team, depending on the rule, a couple of weeks or up to a month sometimes to manually create customized workflow rules. Now it takes less than three minutes.”
- Elizabeth Young, Risk Analyst
Cardless’ manual solution enabled this fraud prevention lag. As Young noted, by the time new prevention rules were eventually implemented, “fraud transactions were coming through which we couldn’t stop because our engineering team just didn’t have the availability at that moment to create and implement new rules.”
Without real-time automated monitoring in place, each rule creation delay represented substantial missed fraud, leading to preventable money, data, and customer losses. Compounding delayed rule creation, the in-house solution also lacked the automated aspect of real-time transaction monitoring and alerting, eliminating the opportunity for manual reviews to help stem some fraud losses. While less ideal than automated prevention, manual reviews can aid threat detection during coverage gaps.
With engineers already overwhelmed by building Cardless’s immense platform capabilities, fraud prevention duties became additional urgent distractions rather than a value-adding activity. This hindered production speed and innovation velocity, slowing go-to-market timelines.
Seeking an autonomous fraud prevention platform capable of self-sufficiency and customization, Cardless evaluated several real-time transaction monitoring solutions.
Solution
Ultimately, Cardless selected Effectiv, a real-time risk management solution provider delivering an end-to-end platform specializing in fraud risk and compliance automation.
Effectiv’s aggregations also play a crucial role by enabling a comprehensive and customized scoring system based on customer rules, leading to faster, more accurate, automated decisions. The platform also allows Cardless to test and iterate its strategies prior to deployment.
“One of the main decision differentiators is Effectiv’s sub-500 millisecond decision timeframe. In fact, we’re averaging 160ms currently which is much faster than any other competitor we evaluated.”
- David Figurelli, Risk Manager
Result
Cardless went live with Effectiv in October 2023. Effectiv delivered tremendous fraud prevention, operational efficiency, and engineering productivity outcomes in just the first two months.
Go-Live with New Rules In Less than 3-minutes
Whereas Cardless engineers previously required up to a month to manually develop new fraud prevention rules, Young now creates customized rules directly within the Effectiv platform in as little as three minutes.
Cardless effectively gained 30 days of productivity per rule while also enabling far more overall rules now that Young can swiftly generate them without dependency on overwhelmed engineers. This automation allows the company to grow linearly alongside its customer base without expanding headcount.
The user-friendly Visual Workflow Builder was instrumental in decreasing rule creation times, enabling Young to achieve self-sufficiency. While many platforms still require coding for customization, Effectiv’s drag-and-drop workflow construction and expansive template library accelerate and simplify rule-building without restricting flexibility.
Over $78K Fraud Automatically Blocked
Of the nearly $11 million in credit card transactions processed in two months, stopping $78,000 in hard dollar fraud will continue to multiply over time as Cardless adds more clients and more end-users. Additionally, another $80,000 was flagged as suspicious, which would not have been marked prior to implementing Effectiv.
Post-Effectiv, Cardless gains instant awareness the moment potential fraudulent transactions occur rather than waiting extended periods for rule creation. As Young explained, “It may come to the Effectiv queue, but it’s also real-time alerting us within Slack. So I’m getting notifications on my phone the second that transaction comes through. This allows me to instantly create new rules in real-time.”
This real-time alerting helps Young proactively evolve fraud strategies by focusing on emergent attack trends versus past events. Coupled with Effectiv’s advanced analytics, data enrichments, visualizations, and collaboration tools, Cardless can finally shift from reactive to proactive fraud postures.
As Figurelli summarized, “Once other companies realize the power of Effectiv’s real-time transaction monitoring solution, it becomes kind of a no-brainer, especially for those who need a flexible and easy-to-use platform that’s also capable of handling complex systems and logic.”
Reduced Manual Reviews
Since going live in November, Cardless has had an auto-approval rate of 99.5%. The remaining 0.25% was auto-declined and 0.25% was sent for review.
Effectiv positioned Cardless to grow responsibly, avoid disastrous fraud impacts, uphold customer trust, and maintain leadership through accelerated digital innovation. The solution has become a keystone piece of infrastructure, enabling the breakneck speed required of leading card program providers.
Effectively empowered Cardless to resolve manual fraud prevention limitations and solidify capabilities required of leading fintech innovators. Just a two-month solution lifespan has already realized tremendous business impact across fraud savings, operational efficiencies, unblocked engineering resources, and risk mitigation essential for continued company growth.
For fellow high-growth fintechs weighed down by primitive legacy fraud tools, the Effectiv platform delivers ready-built modernization and scalability to propel innovation velocity and trusting customer relationships vital to sustainable market positions. Just as Effectiv catapulted Cardless to the next level, this real-time transaction monitoring solution can upgrade fraud prevention and otherwise manual capabilities embroiling engineering resources for other emerging disrupting organizations.
