Credit-Card Cops

In 2009, Yaron Samid's wife bought concert tickets on On the confirmation page, she clicked a link offering a discount on her next purchase. Six months and approximately $80 later, Samid realized that his wife had also unwittingly signed up for a monthly coupon service from Webloyalty, a company whose controversial tactics have drawn the attention of the U.S. Senate and consumer watchdog forums such as Ripoff Report. (A Webloyalty spokesman says its enrollment process "has been enhanced considerably" since 2009.)

Samid, 38, got to wondering: How can banks and credit-card companies invest so much time and money in spotting obvious fraud but miss what he calls "gray merchants" like Webloyalty, who obey laws but elicit annoyed surprise when they show up on credit-card bills? Samid left his job at Pando Networks, an online video distributor, and hooked up with Raphael Ouzan, a 23-year-old computer whiz who had just finished five years in the Israeli military's cyber squadron.

The product they developed is BillGuard, an online service Samid refers to as a "people-powered antivirus for bills." The site, which launched on May 23, detects suspicious charges. Link your credit or debit card, and BillGuard runs each of your transactions through roughly 100 tests to determine their legitimacy. Some of the tests are algorithmic—a "URL miner," for instance, examines a merchant's Web server to see if it has ever hosted malware; a "complaints miner" searches Twitter and consumer forums for criticism. Other mechanisms rely on aggregated wisdom from BillGuard users who are encouraged to flag bad charges. If enough users cite transactions with a questionable outfit, others will get a warning when that merchant appears on their bill.

Samid comes from a family of brainiacs—his father is a computer scientist, his mother an oncologist. "Those genes skipped over me," says Samid, who flunked his first-year engineering courses at the University of Maryland. Ouzan—"the brain of the company," Samid says—oversees BillGuard's six data scientists in the startup's Tel Aviv R&D offices, while Samid serves as chief executive officer.

The service is free for users. Samid hopes banks will pay BillGuard to use its algorithms, which could take the place of expensive call center employees and automatically approve or decline refunds for disputed charges. Banks will "save enormous amounts of money because they spend less time dealing with pissed-off customers," says Roger Ehrenberg, a venture capitalist at IA Ventures who contributed to a $3 million round of financing for BillGuard last May. If so much money is at stake, why aren't the banks already doing this? "Banks aren't in the technology business," says Samid. "We are."


Israeli-born; raised in U.S.; University of Maryland graduate.


Wife's inadvertent registration for a monthly coupon service.


"Banks aren't in the technology business. We are."

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