Every year, older people lose $36 billion to financial fraud. AI has the potential to make this problem far worse since it allows fraudsters to impersonate banks and businesses. Worse, scammers can use AI to impersonate loved ones through video and voice.
After helping his father navigate the labyrinth of healthcare and finances in the United States, Kevin Nazemi decided to reimagine banking for older people. In 2023, he launched Charlie, a banking services fintech geared toward the 62+ crowd. Currently, Charlie operates in all 50 states and has about 20,000 customers.
Today, Charlie is releasing a new anti-fraud feature called SpeedBump. When a new payee or a device that hasn’t been used in 30 days is added to an account, or the account owner transfers over $100 to someone else, SpeedBump activates by pausing the transaction for up to six hours. During this time, Charlie sends notifications through the app, text, and email to the account owner about the transaction and also sends them educational modules about fraud. The hope is the pause is long enough for someone who is getting scammed to reverse the transaction, but not long enough to gum up everyday financial transactions.
Fast Company sat down with Nazemi to discuss what it means to create banking services that help protect older people.
Why create a bank for the 62+ crowd?
Most people over the age of 62 are living off of a very limited set of resources. Typically, this is a Social Security check, and to the extent that they have savings, they’re decumulating. Banking in the United States is dominated towards accumulators and people generating income.
We took out a blank sheet of paper to reimagine what an experience could be like for retirees that was inspired by our experiences with our families.
You came up with Charlie. What makes Charlie different?
Three things. The first is that we give this population more for their money. The second is that we help them keep their money safe. And the third is delivering it with an approach that’s relatable and respectful.
On the first front, we do things like give customers their Social Security check three to five days early. We offer a competitive interest rate, currently 4%, and we don’t charge monthly fees.
On the fraud front, we do things like give you the ability to put your debit card to sleep for everything but recurring transactions, or to block all online transactions except, say, Amazon, if you choose.
On the third front, in terms of being relatable and respecting this audience, we start with U.S.-based customer service: Someone in the U.S. picks up the phone. They understand the context this audience faces. We’ve also designed everything from our apps to the website experience to be simple with big fonts. Even something as simple as copying a verification code that’s long can be a hassle if you are using an older phone and don’t use copy-paste and need to type from memory.
How do you get someone’s Social Security check to them early?
We partner with Sutton Bank, which has been around since the 1800s. When the bank gets a signal the Social Security check is set to arrive, we give the consumer the money, because we know that it’s going to come in three to five days and the government is good for it. And those three to five days can mean a lot to the consumer.
What’s your business model?
We don’t charge monthly fees, so when the consumer uses their Charlie debit card, we get a part of the fees that Visa charges the merchant. Over half of older Americans live Social Security check to Social Security check. There’s not much left at the end of the month, so they don’t meet the minimum balance requirement most banks have. As a result, they face monthly fees, and for in-person banks, waiting in line in a 3,000-square-foot box and getting coughed on. We think they deserve a lot better than that.
Let’s dive more into the details of how Charlie handles fraud. What do you do?
We created Fraud Shield, which is an embedded set of tools to protect consumers’ money. To build it, we thought about what would keep someone’s money safe and give them peace of mind.
There’s a ton of under-$1,000 fraud. When you’re living off of a Social Security check, which is an average of $1,800 a month, that is something that can really create a lot of challenges.
So one feature we have is you can decide which online transactions you want to okay and also get them texted to you. You can also upload a photo of a loved one—a grandkid or pet. If you log onto Charlie and you don’t see that photo, then you’ve logged into a spoof account.
How does your new feature, SpeedBump, add to this?
SpeedBump is really a continuation of that fraud pillar of keeping people’s money safe. Today, fraudsters are impersonating loved ones and pressuring people for money. The data shows if you’re made aware of a scam, you’re 80% less likely to be scammed.
One of the things that scammers love to do is create artificial urgency, to drive people to make quick decisions. For example, our customer happens to be a loving grandmother. A fraudster pretends to be her granddaughter and texts saying: My phone got stolen and so did my wallet. This is my new number. I need some money now.
With SpeedBump, when a new payee is entered in the system with a new phone number, and a large transaction, we put a six-hour pause on that transaction. During that time we notify our customer about the fact that a payment is scheduled and because it’s a new number, it’s going to be released in six hours. And if it happens to be the actual grandchild in six hours, it will go through. And you don’t have to do anything extra.
But beyond texting the customer, emailing them and notifying via the app, we provide education. So in this scenario, there’ll be a text saying if you’re sending something to someone new; make sure that you confirm who they are using a channel that the recipient didn’t contact you from to confirm. In this scenario, our customer emails her granddaughter Jane, and says: “Is this you?” And of course, Jane says: “No, I haven’t lost my phone. It’s not me. It’s a scam.” And our customers able to cancel that transaction within that six-hour window.
SpeedBump can also activate for a device that wasn’t used in the past 30 days. And so now our customer knows that the pause is initiated along with that notice that comes with them, again via text, email, and via the app.
We are always thinking about how can we give our customers pertinent information in order to empower them to not get scammed and frauded.
How do you make sure that your guardrails are helpful and don’t gum up regular transactions?
So SpeedBump is for transfers of money. Typically, when payments go over the ACH rails, the timeline from send to receive is two to three days. Six hours doesn’t change the sender and recipient experience in a case where it’s an authorized and needed transaction, but it dramatically changes the consumer experience for a scam.
For debit card transactions, we’ve got machine-learning tools that are fine-tuned for our type of audience. There’s one type of scenario where the end user decides to turn certain things on and off. For example, I want my debit card to not allow any transactions between 10 p.m. and 2 a.m.—that’s what we call sleep mode.
Now, let’s say that you now try to use your card at that time. You would get a text right away that says that this transaction has been declined because you initiated this control. Do you want to remove this control? If you hit yes, then it’ll ask you, do you want to permanently remove it or remove it for the next 48 hours? And then it will guide you to just now run that transaction again. It’s that simple. There’s no jungle of transfers.
Now there are scenarios where our learning engine thinks that something is out of bounds. For example, older people tend not to go out late at night. If all of a sudden we see something that deviates and a ton of late-night dinners, then you’re going to see us take actions that are consistent with what any other Visa card would do. I don’t want to provide too much detail here, because we are trying to stay ahead of scammers.
What are your future plans?
There’s a ton to do for this segment. We want to create simple, elegant products, so that people can decumulate the assets they have in a tax-optimized and risk-optimized [way]. For example, 80% of this population owns their home. Yet the options they have to unlock home equity are predatory, like reverse mortgages. We’d love to create something that helps older people access their home equity. In general, we’re thinking about how can people get the most for their money. How can they keep it safe? How can we deliver a better experience?