Mastercard: ‘Movies’ Not ‘Snapshots’ of Consumer Behavior Help Banks Counter Scams

Scams, regrettably, are a feature — not a bug — of modern, digital payments and commerce.

And in an era where technology has become increasingly sophisticated, so too have the methods employed by scammers. From identity theft to fraudulent transactions, scams are evolving at an alarming rate, leaving consumers vulnerable and financial institutions grappling with unprecedented challenges.

“The reality is scammers are embracing really sophisticated technologies, like AI (artificial intelligence), to deceive their victims — and scams these days are incredibly convincing,” Chris Reid, executive vice president of identity solutions at Mastercard, told PYMNTS.

That’s because, increasingly, the strategies bad actors use to probe human-level vulnerabilities have evolved from easy-to-spot attempts into highly sophisticated operations.

“The impact of scam crimes is much more severe than traditional payment fraud. It leaves the victim with a reduced self-worth and confidence, and lowers their faith in society,” Reid explained. “This isn’t thinking solely around that moment of the transaction when you’re sending money. We have to protect consumers right from the very beginning of the banking and financial relationship.”

That’s why, amidst the growing threat of industrialized scam tactics, equally innovative solutions are emerging to tackle scams.

As one example, on Wednesday (April 24), Mastercard announced Scam Protect, a suite of specialized solutions combining identity, biometric AI and open banking capabilities to help identify and prevent scams.

Read more: ‘Pig Butchering’ Scams Pose Growing Risk to Businesses

Embracing Sophisticated End-to-End Anti-Scam Protections

According to the FBI, across the United States, people lost $12.5 billion to internet scams in 2023 alone. In the U.K., fraudsters were responsible for nearly 1.4 million thefts during the first half of 2023 — the equivalent of one every 12 seconds.

Given that backdrop, establishing a multi-layered defense against fraudulent activities is increasingly central to protecting against modern scams.

By combining technologies like biometrics and AI, Reid explained that Mastercard aims to gain a comprehensive understanding of digital interactions, moving from a static snapshot to a dynamic portrayal of user behavior. This holistic approach enables financial institutions to thwart scams at various stages, from account opening to real-time transaction monitoring.

“It moves from being a photograph or snapshot of fraud to being a movie of it,” Reid said.

By validating identity data elements, financial institutions can prevent scammers from exploiting loopholes or impersonating genuine account holders.

Additionally, as Reid noted, behavioral biometrics play a crucial role in identifying anomalous user behavior, such as signs of coercion or fraud-induced anxiety, thereby enabling timely intervention.

“We are helping organizations to understand in the digital world what would be more obvious in the physical world,” he explained.

Read more: How Year 1 of AI Impacted the Financial Fraud Landscape

Fighting Fraud is a Team Sport

Mastercard’s AI-powered consumer fraud risk solution empowers banks to intervene in real-time, intercepting suspicious transactions and preventing financial losses. Reid highlighted that initial feedback from banking partners, particularly in the U.K., indicated promising results, with institutions like TSB estimating significant savings resulting from prevented scam payments.

In the quest to stay ahead of emerging fraud vectors, collaboration and continuous innovation are paramount for organizations.

Reid explained that by forging strategic partnerships with companies like Verizon, Mastercard is able to leverage insights and resources at scale to enhance scam detection and prevention capabilities. Through ongoing research and development, MasterCard is able to remain vigilant against evolving scam tactics, ensuring that its solutions evolve in tandem with emerging threats.

“We’re humble enough to know that we won’t have all the answers ourselves to solve this problem to maximum effect, and we do need the help of partners,” said Reid.

Looking ahead, he noted that new attack vectors around synthetic identity fraud and other advanced tactics are already emerging.

“The crime industry is focused on new product development, for lack of a better term … this is truly a global problem that needs to be defended against on a global scale,” Reid explained.