Fighting fraud with Aeropay

Introduction

It is possible for fraud to occur in the partnership with Aeropay for a variety of reasons. The most common reasons are: trying to steal funds by taking advantage of ACH settlement time, fraudulently disputing transactions after they’ve lost a bet/game, or falling victim to account takeover.  

For all of these reasons, Aeropay employs a combination of machine learning-based authorization, limits, and transaction monitoring to prevent and identify potential fraud.

The best results in fraud prevention come with engaged partners because, in most cases, Aeropay and the partner each only see a subset of risk factors. Aeropay, therefore, needs your engagement to make the best decisions on voiding or accepting transactions.



This article will help guide you on partnering closely with Aeropay to fight fraud!





Getting started

Below is a quick summary of the steps needed to be ready to fight fraud with Aeropay:

1. Set up a shared Slack channel focused on fraud reviews. It is best to invite staff who can help make decisions on fraud reviews
2. Review the content in this article
3. Confirm if voiding transactions is an option or not in the event of fraud; if so, clarify expectations on who is responsible for stopping/voiding transactions
4. Receive Aeropay fraud training (optional)
5. Establish internal processes to make decisions on fraud referred by Aeropay, and to provide additional details on cases requiring referral to Aeropay's ODFIs





Overview of Aeropay's limits & monitoring

Aeropay utilizes a combination of machine learning-based authorization, limits, and transaction monitoring to prevent and identify potential fraud.



Model Authorization

Aeropay employs a proprietary machine learning algorithm to decide which transactions to accept or reject.

The model's decisions are automatic and designed to balance risk mitigation with the need to allow good transactions.



Limits

In addition to the model, Aeropay maintains a series of limits to reduce exposure to cases with the highest likelihood of fraud. Aeropay will request information from you to determine whether the limits are appropriate.



Limits include components similar to the following:

• Blocking financial institutions and/or fintechs with extremely disproportionate fraud rates
• Aggregate daily deposit maximums
• Limits to transactions over small amounts of time
• Maximum pending number of transactions



User Management

Every user in the Aeropay system is assigned a “Reputation” based on their Aeropay activity, bank account history, and available balance. 

If a user is suspected of fraudulent behavior, the Aeropay Risk Team can block the user from making payments or accessing the platform at any time. Users who have a declined transaction are disabled immediately until the declined transaction is resolved.

Users who act maliciously or encounter multiple declined transactions are permanently banned from the Aeropay platform.



Additional Monitoring

The decisioning model and limits cannot stop all fraud, so Aeropay also employs monitoring to identify potentially fraudulent activity. Aeropay then investigates this activity and refers it to our partners as applicable.



Examples of monitoring include:

• Deposit transaction velocity
• Transactions amounts
• Transactions incurred through individual high-risk or fraudulent banks
• Duplicate deposits
• New users
• Aged accounts
• Bank account changes
• Identifying information mismatches





Data availability & experience

Each party in the relationship has different sets of expertise and data, making it critical to collaborate closely.

Below, we outline the strengths of both the partner's view and Aeropay's view of a customer to show how these perspectives work together.



Strengths of the partner's view of a customer:

• Length of customer relationship and history of good/bad activity
• Customer's gaming history, including wins and losses
• Geolocation data
• Broader personal information, such as SSN and address

Strengths of Aeropay's view of a customer:

• Funds transfer amounts and timing
• Pattern identification across a range of partners
• More options to stop or block transactions
• Visibility into the same end user's activity at other partners





Ownership of stopping/voiding transactions

We must determine who will have the ability to void transactions.

Some partners wish Aeropay to take action to stop all potential fraud, while others only want Aeropay to " alert " them to potential fraud.



Each approach has different pros and cons, which are outlined below:





Process overview

The following steps outline how Aeropay and its partners would manage potentially fraudulent transactions.

1. Aeropay → identifies potentially fraudulent activity
2. Aeropay → refers the activity to our partner, typically via Slack
3. The Partner → investigates the referral by reviewing available information, including:
   1. The specific red flags/information shared by Aeropay
   2. Internal data that could clarify or resolve the concern, such as:
      1. History with the user
      2. VIP status
      3. Gaming history (wins and losses)
      4. User information (email, phone number, address, etc)
   3. The volume or severity of the activity relative to the partner's internal risk thresholds
4. The Partner → takes the appropriate internal actions (if applicable), such as:
   1. Restricting or blocking the user
   2. Voiding any impacted transactions
5. The Partner → responds to Aeropay's referral with a decision by commenting directly on the escalated instance with either:
   1. No Fraud → indicate "No Fraud" with a brief explanation of why the activity does not appear fraudulent
   2. Fraud Confirmed → indicate "Fraud Confirmed" with a brief explanation of why the activity is fraudulent and the actions taken

   Note: if a partner does not respond before the next ACH processing window, Aeropay will default to voiding the transaction to avoid potential losses for both Aeropay and the partner
6. Aeropay → takes any additional corresponding actions as needed





ACH Windows

It is critical to understand Aeropay's ACH processing windows in order to effectively stop fraud.

When potential fraud is detected, the transaction (s) in question must be voided before the next batch or the fraud will be successful.



Batch Windows:

• ACH batches are sent out Monday - Friday at 12 pm CST.
  • Bank Holidays are not included

To learn more about batch windows and how settlements work, please visit this article.





Referring potential fraud & money laundering to Aeropay

The Bank Secrecy Act and the USA PATRIOT Act require financial institutions to investigate unusual activity. This includes potential or confirmed fraud as well as other suspicious activities like terrorist financing and money laundering.

Aeropay routes transactions through banks, and is in turn required to refer unusual activity to those banks (ODFIs).



To effectively refer unusual activity, Aeropay will, on a monthly basis, request the following from its partners:

• On the suspect/victim:
  • Name
  • Date of birth
  • Address
• On the activity:
  • Nature of the activity, including a brief narrative
  • Date range
  • Total amount





Return Rate monitoring

Aeropay actively monitors its overall ACH return rate as well as that of its partners. In order to retain access to the ACH Network, merchant return rates have to remain under .5% on a count basis for a given month.





Additional resources

Below are some additional resources to help.



Red Flags

Aeropay views, and recommends that you view, the following details as red flags for potential fraud:

• Multiple accounts opened from the same device
• Multiple attempts to create accounts/login from restricted geographies
• Identify Information
  • Email/Name Mismatches (i.e. a customer named Jim Stevens has an email of rachel.dawkins@gmail.com)
  • Uncommon Email Naming Conventions or Extensions (i.e. ending in .ru or any other international domain, @protonmail.com or @proton.me)
• Transactional Activity
  • High-velocity transactions
  • Multiple high $ transactions
  • Test payments followed by escalating payment amounts (ex. $100 then followed by multiple $500 in high velocity or $10-$50 followed)
  • Transactions are large amounts (i.e. >$500 on the first or second transaction with zero payment history)
  • Most of the debits are even numbers and divisible by $50





FAQs

Below are some common FAQs.



I thought our payments were guaranteed. How can money be lost?

Aeropay guarantees that payments will be delivered to a partner's account. In cases of successful fraud, funds lost will be subject to invoicing. Please refer to your contract for the specifics of how fraud billing occurs in your relationship.



Other processors just reject transactions when they think they are fraudulent. Why are you engaging us in the reviews?

This is primarily to deliver on maximizing the acceptance rate and reaching 90-95% acceptance, which is well above the average for ACH payment providers.

Having a manual review process allows us to be more forgiving with our systematic fraud model and generally avoid wrongfully blocking legitimate activity from our teams communicating on these flagged transactions. Of course, this helps avoid blocking legitimate valued users.



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