Mastercard, the owner of the payment system of the same name, has developed an artificial intelligence-based consumer fraud risk solution that enables banks to more effectively detect fraud in real time and prevent their customers from sending money to attackers posing as legitimate fraudsters issue payee, for example a family member, a friend or a retailer.
MasterCard reported According to Bloomberg News, nine of the UK’s largest banks, including Lloyds Banking Group, Natwest Group and Bank of Scotland, already use the company’s fraud detection system.
Authorized push payment (APP) fraud, where an attacker poses as someone else to extort funds, is responsible for around 40% of all bank fraud losses in the UK, and by 2026 according to a forecast by ACI Worldwide and GlobalData only in the US and UK, resulting losses will reach $5.25 billion.
To train the Consumer Fraud Risk solution, we used a dataset from Mastercard’s five-year collaboration with UK banks to identify fraudulent “money mule” accounts, which were then blocked.
An AI-powered Mastercard solution leveraging this data, combined with other insights such as account numbers, payment amounts, payer and payee history, and payee links to fraudulent accounts, enables banks to respond to incidents in real time and block payments before the money reaches sent to the scammer.
The Consumer Fraud Risk system assigns a risk score from 0 to 999 to every bank transfer attempt in half a second, similar to the system already used to detect fraudulent credit card payments. The bank can combine this risk assessment with their own analysis to determine how risky the transaction is and, if necessary, block it before the money leaves the victim’s account.
According to Paul Davis, head of fraud prevention at TSB Banking Group Plc, the system is particularly good at detecting shopping scams, where criminals posing as salespeople trick people into paying for non-existent goods or services, such as the Half of all authorized cases correspond to push payment fraud cases.
TSB, which uses Mastercard’s AI system, estimates consumer fraud risk could save UK banks around £100m a year nationwide.