It's hard to build and maintain a false persona on social networks, and that's what makes sites like Facebook and Twitter such useful tools for controlling risk, says John Canfield, WePay's new vice president of risk management.
WePay, a company that processes payments for mostly small businesses, uses social media to determine if the merchants that apply to be its clients are legitimate or if they are the inventions of fraudsters. If they are fraudsters, they may be trying to set up an account to pay themselves with stolen credit cards.
"Most valid businesses have a digital footprint or a social media footprint. These fraudulent accounts won't have that, or if they do it will be obviously fake," says Canfield, who was previously senior director of global fraud and risk management at eBay.
At WePay, Canfield will oversee Veda, the fraud prevention tool that uses social media and other data sources. WePay may eventually offer Veda as a tool to help merchants vet their own customers.
Some payment companies and financial institutions are using analysis of users' social networking to vet credit risksomeone who is discussing his or her car breaking down is likely to face large repair bill, and is at risk for delinquencies in other payments, for example. Think Finance, an alternative lender, is using social analysis of card payment trends to augment traditional underwriting methods, in an effort to spot potentially risky card customers.
Canfield will also lead WePay's risk management for general merchant risk. Canfield and WePay's risk team will analyze data to spot potential risk issues with transactions or partners.
"There are some businesses that are inherently more risky than others," Canfield says. "We can look at their social footprint to track and analyze a company's reputation, to find somebody who is providing a service to risky payers or payees."
In addition to Canfield's earlier roles at eBay, he's also the founder of Nimbler, a company that builds mobile apps to assist travel.
Both of these roles will inform his work at WePay, as Canfield attempts to ensure registration requirements are balanced with proper vetting, compliance with know your customer and other regulations, and smooth onboarding for the vast majority of businesses that are legitimate.
"At eBay, we built a new workflow for authentication and verification to take user experience into mind," he says. "At Nimbler, the focus wasn't on fraud as much as it was on the usability of the transportation apps, so I was able to add that to my risk experience."
WePay bases its registration requirements partly on whether the merchant is using Facebook Connect to registermerchants who do not use Facebook Connect have to take additional steps. When vetting users, it's important to ask a minimum number of questionsand to make sure the users understand why they are being asked the questions, Canfield says. That understanding can go a long way toward reducing annoyance, he says.
"It's like boarding an airplane. You want to make sure nobody's doing anything risky or dangerous, but you want to make sure they can get on the plane smoothly," he says.