Mastercard Takes AI-Driven Fraud Defense to Next Level

Mastercard is bringing an artificial intelligence (AI)-driven, partnership approach to detecting and preventing identity and payments scams before they can result in victimizing consumers.

The company announced on Wednesday (April 24) a new product suite and several cross-industry partners to combat the use of AI to deceive consumers, according to a news release emailed to PYMNTS.

Called “Scam Protect,” Mastercard is using AI to fight AI. By combining its identity, biometric, AI and open banking capabilities, the company said it can help protect consumers across the spectrum of internet and payments scams, from card-based and account-to-account payments to fraudulent account openings.

According to the FBI, consumers across the United States lost $12.5 billion to internet scams in 2023. 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.

“Scammers are exploiting new technologies, making their deception and impersonation scams increasingly difficult for consumers to recognize,” said Chris Reid, executive vice president of identity solutions, Mastercard. “Building on our innovations in AI and key partnerships, we are supporting financial institutions with insights to better detect and prevent scams, while helping consumers learn how to spot them. This holistic approach means more people will be protected, fostering trust in our digital world.”

Mastercard is launching Scam Protect with a two-pronged product approach. Mastercard Identity verifies an individual’s authenticity from the moment an account-to-account or card-based payment is initiated.

These include behavioral biometrics that can access physical interactions across devices to identify unusual behavior, such as hesitating while typing or interacting with a website or app. It’s aimed at scammers who open or take over accounts to fraudulently apply for credit, create fake bank accounts to receive stolen funds, or to impersonate another individual.

The company is also targeting real-time payments. Its Consumer Fraud Risk solution provides banks with the intelligence to help detect and prevent payments to scammers. Now live in the U.K. with 10 large banks, Consumer Fraud Risk leverages AI to help banks intervene in real time and stop a payment before funds are sent.

The real-time product also enables account validation to confirm account ownership through Mastercard Open Banking. Banks in the U.K., including NatWest, have been the first to use the fraud risk product.

“Impersonation scams, which coerce people into sending money in good faith or paying for goods they think are genuine, require no security breach or hack. They just need to trick their victim,” said Nick Elliot, head of payment fraud, NatWest, in a statement.

“As the sophistication of scams has progressed, so has our real-time monitoring and prevention of fraud,” he continued. “Together with Mastercard, we are using the power of AI to identify payments to fraudsters and stop them before money is lost. In combination with our programme of consumer education and guidance on precautions, we are enhancing the safeguards for all our customers.”

Mastercard is also collaborating with organizations in other verticals to “tackle scams, mitigate their impact, and educate consumers.”

It will collaborate with Verizon on new solutions to protect consumers from scams across multichannel attack vectors.

“By combining Mastercard’s identity insights with Verizon’s robust network technologies, new advanced tools can be designed to more accurately block scammers,” Mastercard said in the release.

Mastercard is also partnering with financial authentication company Entersekt to enable banks to “step up” higher-risk transactions, verifying a sender’s biometrics to authenticate the transaction.

This extra step can protect senders before the funds leave their account. The partnership program also includes a consumer advocacy component. Together with the Global Anti-Scam Alliance, Mastercard will “share knowledge and define joint actions” to advocate for scam protection. Mastercard recently helped establish the Global Anti-Scam Alliance chapter in Singapore, bringing together organizations in the region to collaborate on new solutions to protect consumers.