How To Catch A Liar - Benford’s Law

Today, FinTech companies and NeoBanks have literally flooded the market, and it is almost impossible to decide which one to trust with our money. Businesses are still making such important decisions based on gut feelings, or even worse, the false promises of the providers' sales teams.

Since originally I'm an economist, I use special tools in my work. One of the most powerful, yet underused, tools is Benford’s Law.

Benford’s Law is a mathematical principle used by auditors and investigators to identify unusual patterns in financial data that may indicate fraud or manipulation. It predicts how often certain digits should appear as the first digit in naturally occurring datasets.

I usually apply Benford’s Law to evaluate provider data, such as uptime reports, settlement reports, and other "suspiciously good promises".

The beauty of Benford’s Law is its practicality. We do not need advanced technical knowledge or expensive tools: just a standard report that any serious payment provider should be able to deliver quickly.

Read the full article to see how I uncovered a false report from a PSP lately! https://www.linkedin.com/pulse/how-catch-liar-benfords-law-viktoria-soltesz-q0tgf