Glossary
Benford's Law (in bank statements)
Also called: Benford analysis, first-digit law
One-sentence definition
Benford's Law, applied to bank-statement underwriting, is the observation that genuine deposit amounts follow a predictable distribution of first digits — and that systematic deviations often indicate fabricated or manipulated transactions.
Key takeaways
- A statistical tell, not a smoking gun.
- Strongest signal across hundreds of transactions, not one.
- Often paired with round-number bias as supporting evidence.
Why it matters for MCA underwriting
Fabricated transactions tend to over-represent certain first digits and round numbers in ways that diverge from the Benford distribution. The signal alone is rarely sufficient for a decline; combined with other layers, it adds confidence.
How Vyaso detects benford's law (in bank statements)
Vyaso runs a chi-squared test on the first-digit distribution of credit amounts and surfaces statistically significant deviations, paired with round-number bias and clustering signals.