AI Takes on Scammers!

In today’s increasingly digital world, scams are more sophisticated than ever, and the need for effective protection has never been higher.

Fortunately, Mastercard has taken a bold step in combating fraud by upgrading its Consumer Fraud Risk (CFR) solution. With the help of artificial intelligence (AI), this enhancement aims to provide UK banks with the tools to stop payment scams before they occur.

Let’s dive into how this technology works, the impact it’s already having, and what it means for consumers in the fight against fraud.

AI Takes the Lead in Scam Prevention

Artificial intelligence has revolutionized many industries, and fraud prevention is no exception. By integrating AI into Mastercard’s CFR solution, banks can now quickly and efficiently analyze transactions, looking for patterns that might indicate suspicious activity.

The AI-powered system scans multiple data points in real-time, offering a risk score for each transaction, allowing banks to take swift action when necessary.

But what does this mean for the everyday consumer? For starters, it provides a new level of confidence that their financial transactions are protected against the growing threat of scams. With AI keeping an eye on transactions, banks are much more likely to catch fraudsters in the act, stopping them before they can do any damage.

Mule Accounts: The Hidden Culprits of Fraud

One of the key ways fraudsters operate is by using mule accounts—bank accounts that are used to move stolen money between parties to hide the source of the funds. These accounts can be challenging to identify because they often look like any other account on the surface.

However, the AI upgrade is changing the game by making it easier for banks to spot these mule accounts before they become a problem.

By analyzing transaction patterns, AI can flag accounts that exhibit unusual activity, allowing banks to investigate further. This proactive approach has led to a 60% improvement in detecting high-risk accounts early, a significant step forward in the fight against fraud. \

Imagine a scenario where a scammer attempts to move stolen funds through a mule account, only to be stopped by the AI system before the transaction is completed. That’s the kind of protection consumers can expect from these advancements.

Real-Time Scanning for Better Fraud Detection

The speed at which AI operates is one of its most valuable assets. Scammers rely on the element of surprise, moving quickly to carry out their schemes before anyone notices.

But AI is faster. It can scan vast amounts of data in real-time, analyzing each transaction as it happens. This level of speed and accuracy gives banks the upper hand in stopping fraud before it can wreak havoc.

Additionally, AI-driven risk scores are not just helpful for identifying mule accounts; they can also be used to detect other types of fraud, such as Authorised Push Payment (APP) scams. These scams, where fraudsters trick consumers into sending money by posing as legitimate organizations, have been a major problem in the UK.

In 2023 alone, APP fraud cost UK consumers £460m ($607m). However, with the AI upgrade in place, banks can now better protect their customers by spotting suspicious transactions before the money is transferred.

What Are Authorised Push Payment (APP) Scams?

Authorised Push Payment scams are particularly tricky because they involve tricking the victim into voluntarily sending money. Unlike other types of fraud where a scammer might steal a credit card number or hack into a bank account, APP scams rely on deception.

For example, a fraudster might pose as a legitimate company, sending an email or text that looks completely authentic, and convincing the victim to transfer money.

While APP scams have been on the rise, the new AI-powered system offers hope. AI can catch these scams before the money is gone, by analyzing transaction patterns and looking for signs of deception.

And starting on October 7th, new rules will require banks in the UK to refund victims of APP fraud, giving consumers an added layer of protection. However, there are some exceptions to these refunds, and not all cases will be eligible, so it’s still important to stay vigilant.

Mastercard’s Global Plans for Expansion

While these AI upgrades are already making a difference in the UK, Mastercard has plans to roll them out to more countries in the near future.

This global expansion will help to create a safer digital world for everyone, making it harder for scammers to operate on an international scale. As more banks around the world adopt this technology, the impact on global fraud rates could be significant.

A Positive Impact: Early Results Show Success

The numbers speak for themselves. According to data collected by the UK Payment Systems Regulator (PSR), the value of APP scams in the UK fell by 12% in 2023, from £389m ($514m) to £341m ($450m).

This decline is a promising sign that AI-powered fraud prevention is making a real difference. The data was collected from 14 major UK banks, demonstrating that this technology is already having a meaningful impact.

With fraud detection improving by 60%, banks are now better equipped to stop scams before they happen, protecting consumers and reducing financial losses. This success story is just the beginning, as more banks adopt AI technology to strengthen their fraud prevention efforts.

How AI Benefits Consumers in Everyday Banking

What does all of this mean for you, the everyday consumer? Simply put, it means that your money is safer. Whether you’re making a purchase online, transferring money to a friend, or paying a bill, AI is working behind the scenes to ensure that your transaction is legitimate. In a world where scams are becoming more sophisticated, this level of protection is invaluable.

In addition, with the new UK rules set to take effect in October, consumers can rest a little easier knowing that they will be refunded if they fall victim to an APP scam. While it’s always best to remain cautious and double-check any suspicious communications, this added layer of protection offers peace of mind.

How You Can Protect Yourself From Scams

While AI technology is doing its part to protect consumers, it’s also important for individuals to stay proactive in protecting themselves from scams. Here are a few tips to help you stay safe:

• Be cautious of unsolicited emails, texts, or phone calls asking for money or personal information.
• Double-check payment requests that come through email or text by calling the company or person directly.
• Monitor your accounts regularly for any unusual activity.
• Use two-factor authentication (2FA) on all financial accounts to add an extra layer of security.

By combining AI’s powerful fraud detection with good personal security habits, you can stay one step ahead of scammers.

The Future of AI in Fraud Prevention

As AI continues to evolve, its role in fraud prevention will only grow. The early results in the UK are promising, and as this technology expands to more countries, the global impact could be enormous. While scams will likely always be a part of the digital landscape, AI gives us a powerful tool to fight back.

For now, Mastercard’s AI-powered upgrades are leading the charge, helping to create a safer and more secure world for all of us. So the next time you make a transaction, remember that AI is working hard to keep your money safe—and scammers out of luck.