f the new millennium has any overriding themes so far, fraud would have to be right up there in the top 10. How will we remember the first few years of the 21st century? Probably that they were marked by all kinds of evil shenanigans, from corporate accounting schemes to credit card skimming and identity theft.

The Green Sheet reported on the burgeoning problem of false merchant applications in the May 13, 2002 issue ("Epidemic of False Apps Infects Industry," 02:05:01). Tried-and-true tools of the trade, such as credit and background checks, that previously have weeded out bad ISOs filing bad merchant applications with processors don't always work these days as fraudsters outwit standard procedures time and again. Businesses hungry for new accounts are getting stung more and more often.

A Garden Grove, Calif., company is fighting the battle against fraud one merchant account application at a time. Creditdiscovery introduced its ISOexpress system at ETA 2002 in April in Orlando. It's a solution that will virtually eliminate fraudulent merchant applications in the payment-processing industry, according to Creditdiscovery. For large ISOs/MSPs, acquirers and processors, ISOexpress reduces fraud by 99.9999%.

Shannon Rogan, Creditdiscovery Vice President, Sales and Marketing, said the release of ISOexpress has attracted considerable interest because it is unique. What makes it unique, she said, is the way all the combined elements are put into use to accurately and rapidly process merchant accounts.

"The various components that go into the ISOexpress program are available through other companies' products," she said. "Until now, though, they have not been customizable for this specific industry. Ours is the only comprehensive program out there."

Creditdiscovery is a Web and credit technology-integration company, offering credit-decisioning and authentication services. Creditdis-covery products provide its customers with the tools to make credit decisions rapidly and accurately. ISOexpress is specifically designed to serve the needs of ISOs, MSPs and acquirers for processing merchant account applications.

Several other products are more generic versions, designed for uses such as employee background verifications, tenant reports or utilities enrollment. The principles behind these Creditdiscovery programs are the same as with ISOexpress - they all expedite the often tedious process of verifying and collecting personal or business information to evaluate risk levels.

ISOexpress is a fully automated online enrollment solution designed to expedite the entire merchant application process from start to finish within seconds. This includes providing credit decisions, authentication and legally binding electronically signed documents. Risk associated with agent fraud goes down, sales and revenue go up.

ISOexpress works in three ways and is designed for:

• Merchants applying directly online through the merchant's bank or ISO Web site.
• Participation with internal staff processing manual or faxed applications.
• Field agents via the Web or a PDA. With basic information for qualification and risk,
• ISOexpress can make decisions for the agent quickly.

The system also utilizes artificial intelligence to analyze content of Web sites; when a merchant's URL is submitted, pages are scanned for material that determines risk factors involved in opening an account for this particular business.

The need to eliminate the risks from fraud aside, speed is of the essence in the current marketplace. "We're finding the world today navigating toward the instant-gratification type results," said Randall Sargent, Chief Technology Officer for Creditdiscovery. "We're able to do in literally minutes what used to take up to three days. Businesses of all sorts and sizes are approved or disqualified very quickly. We are helping agents close business deals."

The online application process consists of following a series of easily navigable screens and filling in the required information. Curious ISOs can run through an online demo to see for themselves how the process works. The forms are displayed using DHTML. Sargent said the idea was to make the forms as "non-threatening to the consumer, not too heavy for merchants" as possible.

When ISOs enroll their merchant accounts with Creditdiscovery, these screens and fields can be configured and customized.

The most interesting part of the demo is the electronic signature page. By holding down the cursor and dragging the mouse around, a surprisingly readable version of the applicant's name shows up on the screen. It might look as if it were created on an Etch A Sketch, but the e-signature page is actually a legally binding document; the signature quality comes up to standards set by both the federal E-Sign Act and individual state UETA laws.

Sargent said that, out of 10 million transactions, there are an average of 7,600 occurrences of signature or ID fraud. "The digital signature cannot be altered or modified. We become the third-party observer. The quality of the e-signature is not an issue, it's the intent to sign that becomes important when combined with a commercially reasonable authentication method. Our program is 7,600 times more effective, with much less occurrence of fraud than with standard paper application processes," he said.

When combined with the other verification features in ISOexpress, the opportunity for submitting fraudulent applications is reduced to almost zero. Sargent explained that the information entered in the online applications is compared against five databases for verification. "This is regulated data, non-wallet information, like DMV records, Postal Service address and zip code, phone company records, social security records," he said.

Rogan stressed, though, that Creditdiscovery's target market is typically acquiring banks and large ISOs who carry their own risk. She said the company is looking to work with acquirers and ISOs/MSPs who take their own risk or who process more than 200 applications a month.

Creditdiscovery offers its services for new account boarding; it doesn't do transaction processing. The banking is handled where the ISO, MSP or acquirer will be depositing the money or by whoever will be moving merchant transaction funds. It takes only 15 seconds for the application to be approved or declined; the processor issues a merchant ID after that. "If ISOs have their own risk, we can process right away, or we can refer to several banks," Sargent said.

Creditdiscovery's pricing model works like a subscription, Rogan explained. "Clients are charged a 'set-up' fee to cover all Web site integrations, integration of the clients' underwriting criteria, documents, etc., into the system," she said. "With a minimum monthly fee, the clients are then charged a per-application fee based on usage."

ISOs don't need a special system on which to run the programs - ISOexpress is Web-based and with optional XML gateway hardware clients can integrate data into their back-end systems in real time. Creditdiscovery offers 24/7/365 help-desk services.

Creditdiscovery, founded four years ago and with a staff of 12, seems to be onto something in the effort to eliminate one element in the ongoing battle of good versus evil. Its line of products gives merchants and business owners of all shapes and forms the tools to keep fraud in check.