Customer Story

Mercari reduced fraud exposure and improved compliance while reducing screening times by 20%

20%

reduction in average handling time for standard compliance screenings

Millions

of dollars in avoided compliance penalties and fines

“The great thing about Inscribe is that it has reduced our dependency on other, less secure tools for document storage and also created a better, stronger user experience for retrieving that information and interacting with our sellers.”

Christian Townsend • Director, Anti-Financial Crimes & AML Compliance
Challenges
  • A complex and evolving regulatory environment requires robust compliance tools and processes
  • Newly adopted regulations require the company to collect and store documentation for any seller whose platform sales exceed $600 annually
  • As a startup, the company needed to optimize their existing budget, while improving performance metrics (such as average processing time)
Results
  • 20% reduction in average processing time for a standard compliance screening
  • Millions saved in potential penalties and fines for regulatory violations related to sales of counterfeit or embargoed goods
  • Enhanced security for sensitive documents, a document upload feature and personal information stored in the document repository
About

Mercari is a global ecommerce marketplace founded in 2013 that specializes in peer-to-peer sales of secondhand goods

Industry

E-commerce and retail

Use Cases

Document collection

Document repository

Document review

Headquarters

Palo Alto, California

Employees

~250

Features

AI-Powered Fraud Detection

Document Collection and Storage

Challenges

With 50 million U.S. app downloads and 350,000 listings every day, Mercari is one of the leading e-commerce marketplaces for secondhand sellers in the U.S.

For Director of Anti-Financial Crimes & AML Compliance Christian Townsend, however, every listing is subject to complex regulations and licensing requirements that vary from state to state. This opens the platform to risk when sellers misrepresent their identity or location, or the origin and authenticity of the goods they are selling.

“Our business model is more complex than many other marketplaces because we allow our customers to maintain balances within their accounts,” Christian explained. “Because of that, some states require us to hold a license to conduct that type of activity and operate as a managed service.”

Further complicating the compliance landscape, legislation introduced in 2022 in the U.S. required any marketplace seller with an income exceeding $600 to submit a W-9 to the platform. This significantly increased the amount of documentation Mercari needs to collect, process and store, safely and securely, for their selling community.

With new legislation expected in early 2023 that would generate additional documentation collection and processing tasks, Christian wanted to find a partner that would help him build out a robust compliance program that would streamline the way his team interacted with sellers, gathered and stored documents, analyzed files, and maintained compliance with an ever-evolving array of regulations.

“We needed a partner that would create a safe document collection portal and repository that was easy to implement, easy to use, and offers great protection."

Christian Townsend • Director, Anti-Financial Crimes & AML Compliance, Mercari

Solution

Prior to Inscribe, Christian and his team would go through a painstaking process of requesting the necessary documentation from a seller, having them submit the files through Mercari’s proprietary tools, and then manually reviewing the documents

With Inscribe, that process is now largely automated, allowing the company to collect and review any necessary data from users — such as government IDs, social security numbers, date of birth, tax forms, bank statements, utility bills or any other details that the company needs to validate the user’s identity — via a secure link.

From there, Inscribe checks the documents for any discrepancies, signs of fraud or manipulation (the likes of which are often invisible to the human eye) and returns the highly accurate results to Christian’s review team. Inscribe also acts as a centralized document repository and CRM, allowing the Mercari team to store sensitive files and information in a more secure environment than used previously.

“The usefulness of the product, the interactions with the staff – it’s been a great experience with Inscribe,” Christian says.

As part of the selection process, Christian evaluated several vendors based on a variety of factors, including their end-to-end capabilities, onboarding time, pricing, and customer support. Ultimately Inscribe came out ahead on all fronts.

Now, Christian primarily uses Inscribe on the compliance team to conduct investigations into potential cases of fraud, which can include instances where a seller is posting counterfeit goods or attempting to import goods prohibited within the U.S. As part of this process, Inscribe has also helped Mercari uncover instances of corporate sellers using the platform improperly.

“Because of the change in legislation in 2022, our company placed a lot more emphasis on collecting information from our users,” Christian said. “One thing that came out of this exercise is that a lot of businesses were using our platform, as opposed to individuals. That requires a different process and different data to be gathered to ensure compliance.”

Looking to the future, Christian plans to roll out Inscribe to other parts of his team, including the moderation group, which requests documentation when identifying terms of service violation (such as selling counterfeit items), as well as the risk team, who request identity documents to mitigate charge back exposure and credit card fraud.

“With Inscribe, I saw two things: 1) It solved our need to have a secure place to hold all of the documentation; 2) It identified potential cases of fraud based on submitted documents. For me, Inscribe kills two birds with one stone."

Christian Townsend • Director, Anti-Financial Crimes & AML Compliance, Mercari

Result

In implementing Inscribe, Christian and his team was able to reduce average handle times, shaving up to one minute off the average processing time of about five minutes for a standard compliance screening (that’s a 20% reduction)

“The great thing about Inscribe is that it has reduced our dependency on other, less secure tools for document storage and also created a better, stronger user experience for retrieving that information and interacting with our sellers,” Christian said.

Inscribe also helps Mercari avoid hefty fines and penalties. For example, an alert generated by Inscribe helped the company avoid one potential violation due to fraud detected in documentation sent by the seller. In this case, Christian’s team discovered that the seller was listing embargoed items that can’t be imported in the U.S. — a violation that could result in millions of dollars in fines.

“For us, compliance is not a revenue generator but a strong strategic partner that enables growth, as such there is a strong need for tools that help us collect and analyze documents, quickly and accurately,” Christian said. “As a startup, we value that Inscribe has helped us optimize our budget and also reduce handle times.”

In addition to saving the Mercari team time and money today, Christian also values that Inscribe has other use cases that can help his team in the coming years and beyond, helping Mercari continue to fight fraud and reduce risk, even as the landscape changes.

“Inscribe continues to evolve. It’s one platform that serves many purposes. The sky’s the limit in the future."

Christian Townsend • Director, Anti-Financial Crimes & AML Compliance, Mercari

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