Mastercard’s new AI update targets real-time payment scams

Mastercard has announced significant updates to its Consumer Fraud Risk (CFR) solution, designed to help UK banks better detect and prevent real-time payment scams. These improvements focus on providing banks with enhanced visibility into potentially fraudulent transactions through AI-powered insights, allowing them to block scams before they occur.

Authorised Push Payment (APP) fraud, one of the most prevalent forms of payment scams, cost UK consumers £460 million in 2023. This type of fraud often involves victims being tricked into sending money through fake websites, emails, or phone calls.

Since early 2023, Mastercard’s AI solution has supported 11 UK banks in identifying fraudulent payments before funds leave a victim’s account. The system assigns a real-time risk score based on multiple transaction data points, alerting the sending bank of any suspicious activity. However, the latest enhancements now extend these fraud detection capabilities to receiving banks, enabling them to act quickly when payments are heading towards potentially fraudulent accounts, often referred to as ‘mule accounts.’

Mastercard’s Executive Vice President of Security Solutions, Johan Gerber, commented: “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.”

These developments come as the UK’s Payment Systems Regulator (PSR) is set to introduce new rules on 7 October that will require banks to reimburse victims of APP fraud, barring certain exceptions. While many banks already voluntarily compensate fraud victims, this mandatory regulation raises the stakes for financial institutions to strengthen their fraud prevention measures.

Preliminary tests of Mastercard’s new ‘inbound risk’ alerts have shown a 60% improvement in a bank’s ability to detect high-risk mule accounts. This AI-driven advancement could play a crucial role in reducing the impact of APP fraud, which fell by 12% in 2023, from £389 million to £341 million, according to PSR data.

Mastercard has plans to expand Consumer Fraud Risk to markets globally within the year, aiming to ‘expand the protection offered to consumers and help build a more secure digital ecosystem for all’.

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