Nine British banks have adopted a new AI tool developed by Mastercard. The tool is called Consumer Fraud Risk and aims to address scams. Its primary focus is to assist banks in detecting and preventing authorized push payment (APP) scams. These scams involve tricking victims into transferring funds to a fraudster’s account.
Consumer Fraud Risk employs artificial intelligence to analyze multiple factors. These factors include the customer’s transaction history, recipient’s bank account details, and the timing and amount of the transfer. By analyzing these elements, the tool can detect any suspicious activity. When a transaction is flagged as suspicious, the bank can intervene by reaching out to the customer. This verification process is crucial in preventing the transfer and ensuring the legitimacy of the transaction.
Implementing this system has the potential to save UK banks £100 million annually by curbing APP scams, as estimated by TSB. Currently, TSB and Lloyds Banking Group are testing the tool in a pilot program. The plan is to make it available to all nine banks by the end of 2023.
The prevalence of APP scams in the UK has been on the rise. In 2022, victims lost a total of £1.9 billion to such scams, which is an increase from £1.2 billion in 2021. The Financial Conduct Authority (FCA) warns that as fraudsters develop more sophisticated methods, APP scams are likely to become even more widespread.
To address the surge in APP scams, banks are increasingly relying on AI tools like Consumer Fraud Risk. These tools offer a faster and more accurate way to identify and prevent suspicious activity compared to traditional methods. Consequently, they play a crucial role in safeguarding consumers from falling victim to fraudulent schemes.
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