Fraudology
Stablecoin Fraud Risk, Agentic Commerce, and the Chargeback Liability Gap Nobody Has Solved
51 min
Welcome back to Fraudology.
This week I’m joined by Dave G., who spent years investigating money laundering, wire fraud, and scams before moving into e-commerce and, eventually, directly into crypto. Dave was on the ground floor of Bitcoin back when the white paper first came out, and he brings a rare vantage point on stablecoin fraud risk as someone who has watched a payment technology evolve from a niche curiosity into the backbone of a real conversation about agentic commerce.
We start with a story that sets the tone for the whole conversation. It demonstrates how unpredictable this space has always been, and how easily it is to miss where the real value and the real risk end up landing. From there, we get into the heart of what a stablecoin actually is, and why stablecoin unit economics change the payment fraud conversation entirely. They function less like a new currency and more like an infrastructure upgrade.
That capability sounds abstract until you follow it to its logical endpoint; agentic e-commerce. Everyone wants to talk about AI agents buying jackets, concert tickets, or collectibles, the high-consideration, emotionally driven purchases people actually enjoy shopping for. But Dave argues the real volume, and the real fraud exposure, is going to show up in the boring stuff. Bread, milk, and eggs. The things nobody wants to spend time discovering, just delivered. And when those transactions are worth pennies instead of dollars, low-dollar transaction fraud stops looking like a nuisance and starts looking like a scalable business model for criminals willing to take a cent at a time instead of hundreds of dollars at once.
That shift exposes a chargeback liability gap that already has real victims. A reminder that new payment technology fraud adoption always follows the same pattern: whatever gets built, someone tries to exploit before the guardrails exist.
What you'll hear in this episode:
- How Dave went from investigating money laundering and wire fraud to working directly in crypto, and the story of accidentally giving away roughly $1.5 million in Bitcoin at industry conferences.
- Why stablecoin fraud risk needs to be understood separately from Bitcoin fraud history, and how stablecoins function more like an infrastructure upgrade than a new currency.
- How stablecoin unit economics make micropayment fraud economics viable at a scale traditional card and ACH rails were never built to support.
- Why the agentic e-commerce conversation has it backwards, focusing on high-consideration purchases like jackets and concert tickets instead of the low-dollar transaction fraud risk hiding in everyday purchases like bread, milk, and eggs.
- A real chargeback liability example where a cardholder admitted an AI agent made the purchase, and the merchant still had no compelling evidence chargeback rules to fight it.
- Why device-based identity verification is a weaker foundation than the industry treats it as, and an early look at an emerging protocol for verifying AI agent identities.
- How consortium fraud data sharing can create real, sometimes irreversible fraud blacklist consortium risk when a label gets attached to the wrong entity.
- A subscription chargebacks story involving an antivirus company that charged customers for software that did nothing at all.
- Why every new payment technology, from ACH to stablecoins, follows the same pattern: fraud arrives before the guardrails do.
You should listen to this episode if you:
- Work in payments, fraud risk, or chargeback management and want to understand where stablecoin fraud risk and agentic commerce actually intersect.
- Are responsible for card network relationships or dispute strategy and want to understand the chargeback liability gap in agent-initiated purchases.
- Are evaluating identity verification strategies and want a real critique of device-based identity as a long-term solution.
- Participate in a fraud consortium and want to better understand the risk and responsibility that comes with labeling data.
- Are trying to get ahead of new payment technology fraud adoption instead of reacting to it after losses show up.
- Want a grounded, practitioner-level conversation about crypto fraud and payment fraud that goes beyond the hype cycle.
Episode notes
Stablecoins are an infrastructure upgrade, not just a new currency
Dave explains why stablecoin fraud risk needs to be understood separately from Bitcoin fraud history. Where Bitcoin functions as a volatile store of value, stablecoins are pegged to the dollar and behave more like a settlement layer, one that makes stablecoin unit economics viable at a scale traditional card and ACH rails can't match.
- Stablecoin transactions can settle for a fraction of a cent, compared to interchange and processing costs that make micropayments impossible on card rails today.
- This unlocks micropayment fraud economics previously unavailable to both legitimate businesses and bad actors.
- ACH settlement fraud risk remains a factor for larger transactions, since multi-day settlement windows leave merchants exposed to disputes long after funds have moved.
Agentic commerce risk lives in the transactions nobody's watching
Rather than focusing on big-ticket agentic e-commerce purchases, Dave argues the real fraud exposure is in low-dollar transaction fraud, the repetitive, low-consideration purchases people want automated entirely.
- High-consideration purchases involve discovery and enjoyment, which limits how much agents will actually replace human decision-making.
- Low-dollar, repetitive purchases are where agentic commerce is likely to scale fastest, and where per-transaction fraud losses become too small to investigate individually.
- At scale, thousands of small fraudulent transactions can add up to more loss than a smaller number of high-dollar ones, while drawing far less scrutiny.
Chargeback liability has no framework for agent-initiated purchases
One of the most concrete examples in this episode is a chargeback where the cardholder admitted an AI agent made the purchase, and the merchant still had no way to fight it.
- No card network currently has compelling evidence chargeback rules built for agent-initiated transactions.
- Liability continues to default to the merchant, following the same framework built for mail and telephone orders decades ago.
- Without a clear liability framework, this gap is likely to widen as agentic e-commerce adoption grows.
Identity and consortium data both carry consequences that aren't fully understood yet
Device-based identity verification remains the industry default, but Dave points out its limits, and the real-world risk of consortium fraud data sharing when a label sticks to the wrong person or entity.
- Device signals are increasingly easy for criminals to spoof or recycle.
- An emerging Ethereum-based protocol aims to give AI agents their own verifiable identifiers, though the space is still early.
- A single fraud label shared across a consortium can trigger fraud blacklist consortium risk that's nearly impossible to reverse, even when the label was wrong.
Key takeaways
- Stablecoin fraud risk is fundamentally different from traditional Bitcoin fraud history, since stablecoins function less like a speculative asset and more like an upgrade to the existing financial technology stack.
- Stablecoin unit economics make it possible to process transactions worth a fraction of a cent, opening the door to micropayment fraud economics that today's card networks and ACH rails were never built to handle.
- Agentic e-commerce is most often framed around high-consideration purchases like jackets or concert tickets, but the real exposure lives in low-dollar transaction fraud: the bread, milk, and eggs of everyday commerce.
- Chargeback liability gaps already exist when an AI agent makes a purchase a cardholder later disputes, and no card network currently has compelling evidence chargeback rules built for agent-initiated transactions.
- Identity verification in agentic commerce still leans heavily on device signals, which criminals have already learned to defeat, raising real questions about how to bring physical-world trust into digital, agent-driven transactions.
- Consortium fraud data sharing carries real consequences. A single fraud label can trigger fraud blacklist consortium risk that follows an entity across an entire ecosystem, sometimes permanently and sometimes incorrectly.
Final takeaway
Every new payment technology invites fraud before the guardrails exist, and stablecoins and agentic commerce are no exception. The institutions that get ahead of stablecoin fraud risk won't be the ones reacting once losses show up. They'll be the ones asking, right now, what identity, liability, and consequence actually look like in a world where a transaction might not involve a human at all.
Episode resources & links:
Connect with Dave G | LinkedIn
Senior Risk Leader
Former Special Agent of US Treasury
Connect with Karisse Hendrick | LinkedIn
Host of the Fraudology Podcast
Award-Winning Cyberfraud Expert
Ecommerce Fraud Prevention Consultant
Startup Advisor, Keynote Speaker, and
Consultant to Fortune 500 merchants
Episode transcript
Karisse Hendrick
00:07
Welcome back to Fraudology. Well, I am still getting used to this YouTube thing. But I have a guest today that I've already spent a little over an hour just really fascinated in everything he has to say and and his work history. So I know you guys are really gonna enjoy this episode. I'm joined by Dave. He is a former special agent at the Department of Treasury. He's worked in e-commerce for several years since then, and now works in the crypto space and we're gonna talk crypto and agentic AI in a way that I don't think you've heard anyone talk about it before from the fraud and risk lens but also just in general. So I'm excited about that. Welcome Dave
Dave G.
00:49
Thank you for having me on.
Karisse Hendrick
00:51
Yeah. No, this is this has been fun so far. So I'm excited. Well, everyone who listens to Fraudology or now watches it, they know that I asked the same question to every guest because the answer is always different. How did you get started in the fraud and risk space?
Dave G.
01:10
Yeah. So it's back in, you know, two thousand six or so I started with the federal government. Or, Treasury Department. In working money laundering investigations, scams, wire fraud, and a whole bunch of other, you know, things that go along with it. Part of that also was that early on I got involved in cryptocurrency when the Bitcoin white paper came out. And so spent most of my career tangential to crypto and as you mentioned now, you know, working directly in the space. But so, you know, as we talked about, you know, early years, like, I mean, a lot of crypto was primarily illicit finance and a couple of enthusiasts. And, you know, thankfully that's changed a lot over the last, what's it been fifteen plus years, almost twenty years. But you know, it's it's come a long way. But yeah, that's that's kinda how I got wrangled into it. Was just, you know, it was my job coming out of college. And was something that is fascinating to me and has kept my interest. Because of the ways that it just constantly evolves and, you know, there's never a dull moment. And it's constantly keeping up with everything, technology and finance and whatnot. Because if you don't understand those things, you won't be able to understand how to defraud them.
Karisse Hendrick
02:31
Uh-huh
Dave G.
02:33
Or using them to commit fraud. And so it's a space of constant learning and I enjoy that.
Karisse Hendrick
02:38
I can very much agree with that. Just in the risk and fraud space, even not even in crypto, but just the constant learning. I think those of us that have made this our career. Have really, we have a strong sense of justice, we have curiosity, you know, for days. We love to learn. Those are all very consistent attributes that we have that we all share.
Dave G.
03:06
Yeah, absolutely. I mean the the curiosity I think is the biggest one, right? You just constantly wanna know how does that thing work? And once you understand how that thing works, you know how to break it. And then that's our job is to protect against people breaking it.
Karisse Hendrick
03:22
Yeah, we have to think like them first, right?
Dave G.
03:25
Yeah, yeah, exactly.
Karisse Hendrick
03:27
So, you know, you had told me a fun story about when you were in, you know, at the Department of, the Treasury. I don't know why I was gonna say justice. At the Department of Treasury. You, it was really, you worked there before the the Bitcoin paper came out, right? And there were, you know, there were kind of crypto, but it was all over the place. Not centralized. Not based on math. And then when crypto, you know, when the Bitcoin paper came out, part of your job was to educate other people within the government about Bitcoin and what it was, right?
Dave G.
04:04
Yeah. Yeah, I mean, so yeah. I was on the speaking circuit a lot. Educating you know, private industry, the government and whatnot at a variety of areas. I helped write some of the legislation and regulation around it. And yeah, kind of the like story that we were talking about was so I used to be on the speaking circuit and I would start my talks with: Does anybody know what a bitcoin is? Right? A handful of people that would raise their hand in the audience. And I had bought these minted bitcoins. You can still find them on eBay. They're pretty pricey. But on the back of it it had a piece of folded up paper that had the private key. 'Cause this was days before seed phrases and everything else. And so it had the private key on there. It like laminated onto it. And I would take these and I would flick them out to the audience. And, you know, at that time they were worth you know, twenty to you know, fifty dollars. It wasn't, you know, that much. But you know, at the height of it, I've calculated out that like at $125,000 valuation, I've given away or lost the private keys to about $1.5 million worth of Bitcoin.
Karisse Hendrick
05:20
Ouch.
Dave G.
05:21
Yeah, yeah. It's yeah, I'd probably I'd probably wouldn't be saying I work in crypto, I'd probably be saying I'm retired from all of it. If I had been a little bit more diligent about that. But my government position prevented me from, you know, really having much crypto. And I mean I remember talking to a buddy of mine who, you know, I told him like, Hey man, I I need to buy like five more Bitcoin from you. And he's like, I'm gonna have to charge you twenty five bucks each 'cause like these are hard to come by, 'cause there were no exchanges.
Karisse Hendrick
05:50
Right, and to mine them.
Dave G.
05:55
Yeah. You either minted you you know, mined it yourself, right? Or you went on like local bitcoins and found somebody who was willing to sell it to you. But there was no real like efficient market for it. And so yeah, it was kinda, you know, wild back in the day. But yeah, I never really held too much of it, but apparently I've given away quite a bit.
Karisse Hendrick
06:18
Yeah, I and I would imagine that most of the people that you gave it away to, probably threw it away or put it somewhere. I mean, you know, they didn't think it was gonna be worth anything.
Dave G.
06:28
Yeah. No I've talked to several of them years later. And ended up working with one of them. And I asked him like, you know, Hey, you remember that Bitcoin that I tossed you? And he's like, yeah, yeah, yeah. I was like, You still have it? He's like, No, I probably stuck that in a drawer and it got thrown out in the trash, so. I don't know. Maybe it makes me feel a little bit better that those people don't have the money too. I don't know.
Karisse Hendrick
06:51
That's true, yeah, yeah. It would be worse if he's like, Yeah, and I've been able to buy a boat and a house and whatever else.
Dave G.
06:58
Yeah, yeah, yeah. Sorry, I'm not giving it back.
Karisse Hendrick
07:00
I know, I know, but I tell you I I definitely kicked myself. Because when I learned about Bitcoin, it was, you know, from the fraud perspective. That's what, you know, fraudsters were using on the dark web and you know, for money laundering and and scams and, you know, purchasing foals and everything else. And so you know, somebody asked me if I would ever buy it. And I was like, no, that's for fraudsters. That's not for us. Like that's not and it's never gonna be legitimate, was kind of my thought. I take that back now. But, you know, at the time we only knew what we knew. And we didn't have, you know, there were a couple of, you know, exchanges that popped up over, you know, early on. But they were, they had a lot of fraud and risk problems too. And so, you know, you just didn't think it was legit.
Dave G.
07:58
Yeah. I I mean and I tried to dispel a lot of that early on too as I gave these trainings to the government and private industry and whatnot. 'Cause one of the things, you know, I'd mentioned is that like, well, you know. Hey look, when the radio came out, people would go and commit fraud with the radio by trying to sell you stink oil. And stuff like that.
Karisse Hendrick
08:18
Yeah.
Dave G.
08:19
And when TV came out. And when every subsequent technology we get. Some of the earliest adopters are the people who are trying to exploit it before the controls are in place. Which is, you know, what we're putting in place. But we're not always ahead of the technology. We're often behind the technology. And so every subsequent technology that, you know, comes out often has a group of probably people if they applied themselves would do a lot of good to society,
Karisse Hendrick
08:49
They could cure cancer and solve world peace at the same time.
Dave G.
08:53
Right, exactly. But instead, you know, they're going and figuring out how to get rich quick by using this new technology to defraud. That's unfortunate. But at the same time, like
Karisse Hendrick
09:05
Keeps us employed.
Dave G.
09:07
Yeah, it keeps yeah, keeps us employed and everything else. But it's it's not anything unique to anything. I mean the dollar bill was counterfeited and still is, right?