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Foiling Financial Fraudsters with Confirmation.com’s Brian Fox


“Well, I’m a Nashville native, grew up in Nashville. My parents are from here and my grandparents are from here and as I look at my family history, it feels like just about everybody was entrepreneurial.”

 

From manufacturing plants to candy stores, confirmation.com founder Brian Fox’s family ran thick with business-minded people building concepts in Middle Tennessee. It made entrepreneurship a no-brainer for Fox, who got his start with several early businesses selling flowers and lemonade, resealing driveways, and managing duplexes for his mom. 

 

“I just loved the fact that we were out there and the effort that we put into it was a direct reflection of what we got out of it,” he said.

 

The accounting education that led him to eventually start confirmation.com didn’t come so naturally; instead, it was learning from the experiences of older, more experienced entrepreneurs as he chose his path going into college. 

 

“Because I knew I wanted to be an entrepreneur at some point in life, I was interviewing entrepreneurs along the way. And one of the things just about all of them said to me, when I asked the question, `What would you have done differently?’” he said. “Almost universally, they said they would have taken more accounting classes. They wished they’d known more about their business. That accounting really is the foreign language of business.”

 

Fox graduated with a degree in accounting, and of the six major firms, chose to begin his career at Ernst and Young, where he spent his days in the throes of office work – making copies and manning the fax machine. 

 

By year two, he was put in charge of confirmations, a crucial but painstakingly long part of the auditing process that allows for banks and clients to verify accounts and the money in those accounts – meaning Fox was parked in front of the fax machine for sometimes hours a day.

 

“Confirmations are one of those tasks that take place at the staff level. And so once you have done it, you kind of forget about it. You hate it. You didn’t like it. You don’t want to deal with it and you just let the interns and the staff deal with it,” Fox said.

 

Not only was the task long and exasperating, Fox realized, but the longer he worked with the process, it was also a major opportunity for oversight…or even criminal activity.

 

“Nobody saw it as being that critical to the audit. Nobody saw it as being that important. And yet I saw the direct correlation to audit confirmations and revenue and cash in the bank and how easy it would have been for me to commit fraud. And so I said, ‘If I can figure out how to commit fraud on these firms, why aren’t they seeing it?’” he said.

 

Fox began to plan, mentally devising a solution to fix the process that had been only barely changed in almost 80 years and bringing it with him to Vanderbilt University as he pursued his MBA. By mid-2000, he had a business plan ready to go. 

 

Until tragedy struck. While on a trip in Sedona, Arizona, Fox’s father fell from a steep drop during a solo hiking excursion; he was found dead the next day. 

 

“And so I’d lost my dad at that point. And I had this idea and as we were going through the process of going through my dad’s estate…he had an insurance policy…,” Fox said. “And so at the end of my first year of graduate school, I incorporated the business on June 9th of 2000. And with $200,000 from his life insurance policy, I started confirmation.com.”

 

Using the same two-party network model as match.com, Ebay, and Priceline, Fox began to consider the technology it would take to bring his business to life and he brought on four advisors to kickstart growth in exchange for 20% of the company. Little did he know, though, that the people he’d brought on to bring his company to life were sabotaging it.

 

“What I found out was that they had actually been stealing from me. They were stealing cash,” Fox said. “And we were pretty much out of money at that point in time because they’d run me dry. I wanted to go after them but Chris’s advice was look, nobody’s going to invest in a business with no revenue that’s embroiled in a lawsuit. So you got to take your lumps and you just got to figure out an agreeable way to get out of this.”

 

The Chris in question was Chris Schellhorn, a seasoned tech executive who joined Fox’s team soon after as chairman and CEO, leading the business’s operations while Fox advocated for it in the community.

 

“It was more important to me that I have success in the business, then that I retained some title,” Fox said.

 

Funding the business was the biggest challenge. In the aftermath of 9/11, the company was under financial stress with only a few clients, with the deficit falling on Fox’s personal credit card.

 

“So we were really taking investments as small as $500 to a thousand or $5,000 from people. Any aunt, uncle, cousin, relative high school friend, college roommates, their parents, anybody who kind of felt sorry for us, that we could convince to invest in the business,” Fox said.

 

Then, world events took a turn – for better or for worse.

 

“The largest fraud Europe had ever seen was a company called Parmalat and they had faked a $4.9 billion bank account,” Fox said. “Parmalat executives had used Bank of America’s name to commit their fraud.

 

“They never had an account at Bank of America, but told their auditors they did. And so when the auditors were sending a confirmation to whom they thought was Bank of America, which was really the executives at Parmalat.”

 

It was exactly the situation that confirmation.com had been built to prevent, and more scandals would come in the following months. Suddenly, business was booming, and confirmation technology was in high demand.

 

“They had said, you know, why can’t accountants figure out if a bank account is real or not? And I said, we have the technology to do it. And so we started getting phone calls at that point in time that really put us on the map, the Parmalat fraud, put us on the map. And when Bank of America mandated the use of our service that put us over the top.”

 

In five months, the company jumped from a portfolio of 200 firms using their service, to over 4500 in 147 different countries. Businesses were flying to Nashville just to thank the team for saving them money.

 

A private equity investment of $60 million in 2017 allowed the company to build their customer network to be even stronger, and in 2019, the business was sold to Thompson Reuters. All of the first four employees, Fox included, made the jump.

 

“As I look back at the journey of confirmation.com, one of the things that probably most people don’t know that I’m most proud about is the fact that the four of us that were in the garage in those early days were there the day we sold 19 years later to Thompson Reuters.”

 

This year, Fox announced that he would be leaving Thompson Reuters to pursue his next opportunity. An entrepreneur at heart always, he gives back to those coming up behind him as an investor, helping them bring their dreams to life. And all these years later, he still holds on to the mission that drove confirmation.com in the first place.

 

“The unofficial motto for our company was we help the good guys catch the bad guys. That was my mission. That was our mission for the business. I felt that if my business was only about efficiency, I’d have been bored a long time ago and probably sold. But I felt like we had a mission and a purpose every day that we woke up because I knew the bad guys were out there trying to get around us, trying to circumvent us.”

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