Joining the Mafia 108
could recover some money or if they had to alert the
FBI.186,189
One of these algorithms was IGOR, named after a
Russian criminal who claimed it was impossible to catch
his fraud attempts. The algorithm could find suspicious
accounts and alerted PayPal if it saw money transfers that
appeared to be on its way to questionable destinations.^393
Another algorithm tracked unusual patterns of behavior,
such as small transfers of money to the same account at
regular intervals. “If we’re successful, it’s like pre-crime,”
Levchin said. “We try to figure out what they’re going to
do so we can stop them before or in the act.” IGOR became
so good at detecting fraud that the FBI began to use it.^185
It was in large part because of these risk-algorithms
that PayPal succeeded and their competitors didn’t. While
another company had 25 percent fraud, PayPal claimed
it had found a way to bring the fraud rate down to less
than 0.5 percent.^253 And you can say that PayPal exported
fraud to their competitors. Because they had so good risk-
algorithms, the fraudsters gave up their attempts to fool
PayPal and began fooling PayPal’s competitors. “I remem-
ber all these companies announcing they were going out
of business and they expected PayPal to go out of business
soon too, because the fraud numbers were so staggering
that they could not see any one handling this sort of thing,”
Levchin said.^186
Elon went on a two-week trip to meet future investors,