Mastercard Enhances AI Tool to Combat Payment Fraud

Mastercard, the global payments technology company, has announced an expansion of its artificial intelligence (AI) capabilities designed to help banks protect consumers from increasingly sophisticated payment scams. 

The enhanced Consumer Fraud Risk (CFR) solution now offers additional features to combat Authorised Push Payment (APP) fraud, a type of scam where victims are tricked into transferring money to fraudulent accounts.

APP fraud on the rise

APP fraud, often initiated through deceptive websites, emails, text messages or phone calls, resulted in UK consumers losing £460m (US$615m) in 2023. 

The scale of the problem has prompted regulatory action, with the UK's Payment Systems Regulator (PSR) set to introduce new rules on 7 October 2024 requiring banks to reimburse APP fraud victims in most cases.

Mastercard's CFR solution, which has been operational since early 2023, utilises AI to analyse multiple data points associated with a transaction. It provides a real-time risk score to the sender's bank, enabling them to potentially identify and halt fraudulent payments before they are processed.

New features target 'mule' accounts

The latest enhancements to the CFR system extend its capabilities to receiving banks. 

These institutions can now receive risk scores within seconds, allowing them to detect when a payment may be destined for a 'mule' account – a term used in the financial industry to describe accounts controlled by fraudsters.

Johan Gerber, Executive Vice President of Security Solutions at Mastercard, says: “Fraudsters have long sought to deceive the consumer through scam websites and fictitious deals.

"That's why, at Mastercard, we are turbocharging our technology, providing banks additional lines of defence – helping them better identify and stop scams in their tracks.”

Early results and future plans

Mastercard reports that initial offline tests of the new 'inbound risk' alerts have demonstrated a 60% improvement, on average, in a bank's ability to identify high-risk mule accounts early within its account base. 

This development comes as the PSR's data from 14 of the largest UK banks showed a 12% reduction in the total value of APP scams from £389m (US$520m) to £341m (US$456m) across 2023.

The company has stated its intention to expand the Consumer Fraud Risk solution to markets globally within the year. This move aims to extend the protection offered to consumers and contribute to building a more secure digital ecosystem for all participants in the financial system.

Solutions like Mastercard's CFR are likely to play an increasingly important role in the ongoing battle against fraud. 

Johan Gerber concludes: “We are turbocharging our technology, providing banks additional lines of defence – helping them better identify and stop scams in their tracks.”

The launch of Mastercard’s Consumer Fraud Risk solution comes after it released Decision Intelligence Pro, a Gen AI consumer protection tool, earlier this year. 

The transaction risk assessment tool works by assessing the relationships between multiple entities surrounding a particular transaction, and further represents Mastercard’s commitment to consumer safety. 

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