How to Combat Identity Theft Two small businesses team up to combat fraud.

You'd think that M2 Benefit Solutions, a St. Louis-based marketer of identity-protection, travel and telehealth services, would be the last company to fall victim to fraud. But a couple of years ago, co-founder Mark McLaren spotted unauthorized charges on his corporate card. He quickly canceled the card and started thinking of ways M2 could augment its identity-theft protection services by adding a level of security that would automatically catch illicit charges that go unnoticed by banks and credit card companies.

The Fix
McLaren turned to BillGuard, a financial security startup based in New York. The company monitors credit and debit transactions by running them through more than 100 security tests each day. The tests look for hidden fees, billing errors, unwanted subscriptions, scams and fraud--items that have been reported to various banks, credit forums and social media networks to which BillGuard has access. If anything looks suspicious, the system shoots an e-mail alert to cardholders. "We're the only company that looks for hidden fees and the gray charges--small charges that most of the time go undetected," says Mary Anne Keegan, BillGuard's chief marketing officer.

Keegan convinced McLaren to sign up for BillGuard's free account, which monitors up to three cards, and to register his personal card to test the service. It immediately identified a recurring (albeit legitimate) charge for a program McLaren had intended to cancel months prior--the type of unwanted charge that is commonly overlooked by both consumers and company accounting departments. Indeed, BillGuard estimates that the average consumer loses more than $300 a year this way.