JPMorgan's $175M Fraud Acquisition

Sam Parr tells the story of how JPMorgan discovered fraud after acquiring a college financial aid platform called Frank.

"JPMorgan bought this lady's app for 9 figures - over $100 million. They tracked down what happened by talking to the developers. They found that Frank hired one freelancer and asked them to make some test data. The first guy said 'I think this is fraud' and backed out. They found those emails.

Then they hired another contractor who actually did it after they convinced him it wasn't fraud. When JPMorgan sent their first email to their supposed customer list, they got a 70% bounce back rate. They even found emails where she's asking the professor who ended up doing this 'Will the fake emails look real with an eye check or is it better to use unique ID?'

What's crazy is this was so obvious to catch. When I sold The Hustle, we had 1.7 million subscribers and used services through Hubspot that could check for fraud in just a couple days. There are services specifically made for creating fake test data for sensitive things like bank startups, where you need to test with fake social security numbers. But this wasn't that - this was straight up fraud to deceive JPMorgan in a $175 million acquisition."