TL;DR:
- Mastercard introduces its AI-powered ‘Consumer Fraud Risk’ solution to combat various types of scams, leveraging its advanced AI capabilities and network view of account-to-account payments.
- The solution enables banks to predict and prevent payment scams by analyzing large-scale payment data and identifying fraudulent transactions before funds leave a victim’s account.
- Mastercard collaborates with nine UK banks, including Lloyds Bank, Halifax, Bank of Scotland, NatWest, Monzo, and TSB, to enhance fraud detection and intervention.
- The AI tool traces funds through ‘mule’ accounts, closing them down and preventing further fraudulent activity.
- TSB reports significant success in fraud detection within just four months of implementing Mastercard’s solution, with potential savings of nearly £100 million for all UK banks.
- Impersonation tactics, such as authorized push payment fraud, account for 40% of UK bank fraud losses.
- Mastercard’s AI technology has already prevented over $35 billion in fraud losses in the past three years.
- The solution helps banks identify different types of scams, including purchase scams, impersonation scams, and romance scams.
- Mastercard plans to expand the implementation of its Consumer Fraud Risk solution to other international markets.
Main AI News:
The rise of scams, ranging from romance frauds to fictitious online deals, has severely impacted individuals and businesses, shattering their trust and leaving them vulnerable. However, Mastercard, a global leader in payment technology, is leading the charge against fraudsters with its groundbreaking AI-powered tool called “Consumer Fraud Risk.” This unique solution has recently been launched in the United Kingdom, signaling a significant step forward in the ongoing battle against payment scams.
By harnessing the power of Mastercard’s latest AI capabilities and leveraging its comprehensive network view of account-to-account payments, this innovative tool empowers banks to predict and prevent various types of scams effectively. Collaborating with nine prominent UK banks, including Lloyds Bank, Halifax, Bank of Scotland, NatWest, Monzo, and TSB, Mastercard utilizes vast amounts of payment data to swiftly identify real-time payment scams before funds are unlawfully extracted from a victim’s account.
Perpetrators of organized crime often funnel ill-gotten funds through a series of “mule” accounts to obscure their origins. To combat this sophisticated tactic, Mastercard has dedicated the past five years to collaborating with UK banks, meticulously tracing the flow of funds through these accounts and ultimately shutting them down. By merging insights gleaned from this extensive tracking endeavor with specific analysis factors such as account names, payment values, payer and payee history, and links to accounts associated with scams, Mastercard’s AI solution empowers banks with the intelligence needed to intervene in real time, thwarting fraudulent transactions before victims suffer financial loss.
TSB, one of the pioneering banks to adopt Mastercard’s Consumer Fraud Risk tool, has already experienced significant success. Within just four months, the bank has dramatically enhanced its fraud detection capabilities. Based on TSB’s remarkable results, if all banks were to replicate their performance, the prevention of scam payments over a year could amount to nearly £100 million saved throughout the UK. Several other banks are currently in the process of integrating Consumer Fraud Risk into their operations, with Mastercard actively exploring additional international markets to scale the solution’s impact.
As banking and payment security continue to advance, fraudsters have adapted their tactics, focusing on impersonation schemes. Their primary objective is to deceive individuals and businesses into sending them money under the guise of legitimate transactions with trusted entities, such as friends, known suppliers, or seemingly genuine online vendors. Known as “authorized push payment fraud” or APP fraud, this insidious form of fraud already accounts for 40% of all UK bank fraud losses, and projections estimate that it could incur a staggering $4.6 billion in damages in the United States and the UK alone by 2026.
“Banks have encountered significant challenges in detecting these scams,” stated Ajay Bhalla, President of Cyber and Intelligence at Mastercard. “Criminals have exploited the fact that customers pass all the necessary security checks and willingly transfer money themselves, thereby circumventing existing security measures. As our lives become increasingly digital, this type of fraud erodes consumer confidence in online interactions. Our objective is to foster and preserve that trust. By utilizing state-of-the-art AI technology, we empower banks to identify and predict payments made to fraudsters, enabling them to take real-time action and prevent financial losses.”
Mastercard has been at the forefront of AI adoption for nearly a decade, employing this transformative technology across its entire business landscape. Notably, Mastercard’s AI-powered cybersecurity solutions have successfully prevented fraudulent losses totaling over $35 billion in the past three years alone.
Paul Davis, Director of Fraud Prevention at TSB, emphasized the value of the intelligence provided by their partnership with Mastercard: “Identifying fraudulent payments within the vast number of daily transactions is akin to finding a needle in a haystack, especially with scams becoming increasingly sophisticated. Prevention and monitoring tools are absolutely essential.” Davis further highlighted that Mastercard’s collaboration has equipped TSB with the necessary intelligence to identify fraudulent accounts promptly, ensuring that suspicious payments never reach their intended destinations.
Initial results from banks employing Consumer Fraud Risk’s scoring system have showcased remarkable success in preventing scams, particularly when combined with insights into customer behavior. This powerful combination has enabled banks to develop targeted fraud strategies, precisely identifying various types of scams, including purchase scams, impersonation scams, and romance scams. Shockingly, purchase scams now account for a staggering 57% of all scams in the UK, continuing to pose a significant challenge for banks.
In the UK alone, there were 207,372 reported incidents of authorized push payment (APP) scams in 2022, resulting in gross losses amounting to £485 million. Recognizing the vital importance of the UK’s real-time banking system in the fight against financial crime, Mastercard has chosen to roll out Consumer Fraud Risk in the country first. Leveraging its extensive experience in tracing and combating fraudulent activities, Mastercard has successfully facilitated collaboration and data sharing among banks to combat fraud. Having achieved considerable success in the UK, Mastercard is now actively identifying the next most suitable markets to adopt this cutting-edge technology, solidifying its commitment to safeguarding payment systems and protecting consumers and businesses worldwide.
Conclusion:
Mastercard’s AI-powered ‘Consumer Fraud Risk’ solution represents a significant step forward in the fight against payment scams. By leveraging advanced AI capabilities and collaborating with major UK banks, Mastercard provides a robust system for predicting and preventing fraudulent transactions in real time. This innovation not only enhances fraud detection and intervention but also helps banks identify various types of scams, enabling them to develop targeted strategies for fraud prevention. The success observed by TSB and the potential savings for all UK banks demonstrates the tangible benefits of this technology. As the threat of payment scams continues to evolve, the adoption of AI-powered solutions like Mastercard’s will play a crucial role in safeguarding the market and restoring confidence in online transactions.
