How Mastercard’s AI is Changing the Game Against Fraud

Stay One Step Ahead of Scammers with Mastercard’s Revolutionary AI Solution

Mastercard has just released an enhanced version of its Consumer Fraud Risk (CFR) service, which expands the ways in which it assists in protecting customers against fraudulent Real Time Payment businesses. The insights that are provided by AI provide more banks in the United Kingdom with greater visibility into potentially fraudulent transactions, allowing them to prevent frauds from occurring before they occur.

Consumers in the United Kingdom were cheated out of £460 million ($607 million) in 2023 as a result of these scams, which are known as Authorized Push Payment (APP) fraud. These scams are typically initiated by a bogus website, email, text message, or phone call.

In today’s world, victims can request that their money be returned to them by banks. Beginning on October 7th, new regulations imposed by the Payment Systems Regulator (PSR) in the United Kingdom will mandate that banks be required to compensate all victims of APP fraud, with a few exceptions.

Through the use of the Mastercard solution, eleven financial institutions in the United Kingdom have been able to detect and thwart fraudulent payments before the money leaves the account of the victim. In order to function, it searches through a number of data points that are connected to a transaction and then provides a risk assessment to the bank that is sending the money in real time.

This report compiles payment information from fourteen of the top banks in the United Kingdom that are required to report it. The data showed that the entire amount of APP scams decreased by 12% over the course of 2023, going from £389 million ($514 million) to £341 million ($450 million).

With the new and extra artificial intelligence upgrades to Consumer Fraud Risk, receiving banks are able to obtain the same score in a matter of seconds. This enables the receiving banks to identify instances in which a payment may be destined for an account that is used by fraudsters, which is referred to as a mule account. The initial offline tests of the extra ‘inbound risk’ alerts have shown that a bank’s capacity to identify high risk mule accounts early on within its account base has improved by an average of sixty percent.

Within the next year, Mastercard intends to expand Consumer Fraud Risk to markets all over the world. This will result in an increase in the level of protection they provide to customers and will contribute to the development of a digital ecosystem that is more safe for everyone.

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Industry Comments

“Fraudsters have long sought to deceive the consumer through scam websites and fictious 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,” said Johan Gerber, Executive Vice President, Security Solutions at Mastercard.

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FAQ: Mastercard’s AI Solution to Combat Fraud

What is the Consumer Fraud Risk (CFR) service?
Mastercard’s Consumer Fraud Risk (CFR) service is an advanced tool designed to help financial institutions detect and prevent fraudulent transactions in real time, specifically for Real Time Payment businesses. The AI-powered solution analyzes multiple data points related to a transaction, providing risk assessments to banks and helping them block fraudulent payments before they are completed.
How does the AI technology in CFR work?
The enhanced CFR service uses artificial intelligence to analyze transaction data and provide real-time risk assessments to banks. It searches for signs of fraud, such as transactions linked to “mule accounts” (accounts used by fraudsters), helping banks identify and stop scams before money leaves the victim’s account.
What is Authorized Push Payment (APP) fraud?
APP fraud occurs when fraudsters trick consumers into authorizing payments to them, typically through fake websites, emails, texts, or phone calls. In 2023, UK consumers lost £460 million ($607 million) due to APP fraud.
How has Mastercard’s solution helped reduce APP fraud?
In 2023, Mastercard’s AI solution helped reduce APP fraud by 12%. By providing banks with real-time risk scores, the solution enables them to identify fraudulent transactions and prevent them before the money is sent.
What new regulations impact banks and APP fraud in the UK?
Starting October 7th, 2023, the UK’s Payment Systems Regulator (PSR) mandates that banks must compensate victims of APP fraud, with some exceptions. This regulation has encouraged banks to strengthen their defenses against fraud.
How effective is Mastercard’s AI in detecting fraud?
The new AI upgrades to the CFR service allow receiving banks to identify high-risk transactions, including payments to mule accounts. Initial tests show a 60% improvement in identifying high-risk mule accounts early, helping banks prevent fraud more effectively.
How will Mastercard expand this solution?
Mastercard plans to extend its Consumer Fraud Risk service globally over the next year. This will enhance protection for customers worldwide, contributing to a safer digital ecosystem.

Conclusion

Mastercard’s AI-powered Consumer Fraud Risk service is transforming the way banks detect and prevent fraud. By analyzing transaction data in real-time and providing actionable risk assessments, it helps protect consumers from scams like APP fraud. With plans to expand globally, Mastercard is working towards building a safer digital payment ecosystem, one where fraudsters face greater challenges and consumers can transact with confidence.

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