In the age of the coronavirus, everyone is conducting all facets of daily life – commerce, banking, schooling, working – from home. In an interview with PYMNTS, Mitch Pangretic, senior vice president of strategic partnerships at Elan, said that in-person card fraud may have decreased...
![If it seems like cases of fraud and hacking are always in the news, that’s because new incidents pop up practically every day. One of the latest involves hackers successfully accomplishing account takeovers (ATOs) of users of Zelle, the digital payment service. According to the new Digital Fraud Tracker, total losses due to fraud equaled $4.2 trillion in 2018, and fraudulent mobile app transactions increased 680 percent between 2015 and 2018. Fraud doesn’t impact all industries equally. According to the Digital Fraud Tracker, one-quarter of malware specifically targets FIs, and over 5 percent of online retail revenue is now lost to fraud. By 2020, it’s estimated that U.S. credit card losses will exceed $12 billion. More businesses are adopting artificial intelligence (AI) and other technology to fight fraud. According to the AI Innovation Playbook, 63.6 percent of FIs believe AI is an effective tool for stopping fraud before it happens, and 80 percent of fraud specialists using AI believe the technology could reduce payments fraud. Financial Institutions The rise of online banking has provided a host of opportunities for fraudsters. Old manual detection techniques like analyzing geolocations, IP addresses and discrepancies between billing and shipping addresses aren’t able to catch high-level attacks, and often result in false positives. BNY Mellon implemented an AI-based fraud detection initiative in 2018 to use pattern recognition and deep learning to analyze millions of transactions and identify those that are likely fraudulent. AI isn’t just used for fraud detection in the financial industry – it can also help with regulation compliance and adherence to anti-money laundering (AML) standards. Joseph Sieczkowski, head of technology architecture and data at BNY Mellon, explained how it isn’t enough to use AI reactively. Financial institutions also need to stay one step ahead of fraudsters, because they change techniques quickly and often. “[We] do testing constantly to retrain our models to be able to pick up on different types of fraudulent activities,” he said. Retail Balancing security with improving the customer experience is a challenge for all industries, though reducing friction is even more vital for luxury merchants. “Luxury retailers typically operate in a ‘high-touch’ environment, designed to be as friction-free for the customer as possible,” said Shamoun Siddiqui, chief information security officer of Neiman Marcus, in an interview with PYMNTS. “Any measure of security introduces friction. So, the challenge is to make security as transparent as possible while still protecting the customer’s personal information.” The luxury retailer has been using device fingerprinting to identify devices based on unique configurations – and, ultimately, to determine whether it’s being used by a human or is automated. “We are investing heavily in fraud detection systems that [use] machine learning and artificial intelligence to differentiate between normal patterns of customer behavior and potentially fraudulent ones,” Siddiqui said of the retailer’s approach to identity theft and other types of fraud. “These are patterns that would not be visible to the naked eye.” Fraudsters are getting more sophisticated, making use of bots to mimic typical online shopping behavior. After Neiman Marcus identified a bot attack, the hackers started including mouse movements to fool detection systems. Gaming Due to in-game purchasing becoming more standard – a recent study found that approximately half of all personal computer (PC) and console gamers spend money in-game, a share that climbs to more than 75 percent for mobile gamers – gaming platforms have become an attractive target for fraud, especially for hackers who acquire personal data via account takeovers. Gaming and gambling sites face similar issues, as too many security measures can turn off users who will go elsewhere. Some sites are reluctant to implement overly stringent security measures. Beyond using machine learning to detect fraud before it happens, gaming platforms are also using liveness detection, which requires players to be physically present during the verification process so they can submit photos, video playback or audio recordings to confirm their identities. Fingerprints, voice prints and other forms of biometric authentication are gaining steam in the arsenal of fraud-fighting tools. More than 63 percent of all smartphones manufactured in 2017 incorporated some type of biometric authentication, and a growing share of devices are expected to offer these solutions as fraud increases.](https://www.pymnts.com/wp-content/uploads/2019/06/digital-fraud-ai-tools.jpg?w=160&h=113&crop=1)
The good news in the world of fighting fraud and cybercrime is that, by the numbers, the battle against the thieves has been shown to be tipping toward the white hats. As GIACT EVP David Barnhardt noted in a recent conversation with Karen Webster, overall...
Fraudsters are using the universal credit (UC) benefits system to defraud U.K. families, leaving them without any money. According to The Financial Times, local authority workers blame the fraud on flaws in the online system that is used to apply for the new program, which...
Everything can seem right. But that’s only because the criminals are good. A person calls to inform a consumer that his or her account had been frozen because of what was supposedly a “fraudulent transfer” or some other problem. The caller sounds professional, and might...
May 05, 2020
In the age of the coronavirus, everyone is conducting all facets of daily life – commerce, banking, schooling, working – from home. In an interview with PYMNTS, Mitch Pangretic, senior vice president of strategic partnerships at Elan, said that in-person card fraud may have decreased thanks to EMV chips and multi-factor authentication, but card-not-present (CNP) […]
June 14, 2019
The good news in the world of fighting fraud and cybercrime is that, by the numbers, the battle against the thieves has been shown to be tipping toward the white...
December 06, 2018
Everything can seem right. But that’s only because the criminals are good. A person calls to inform a consumer that his or her account had been frozen because of what...
August 03, 2017
Fraudsters are good at what they do. Payments got faster, but so did criminals. Banks built more defenses, and bad guys jumped over them with glee. But Uri Rivner, BioCatch...
May 27, 2019
Fraudsters are using the universal credit (UC) benefits system to defraud U.K. families, leaving them without any money. According to The Financial Times, local authority workers blame the fraud on flaws in the online system that is used to apply for the new program, which groups six existing benefits — including housing benefits and disability […]
July 18, 2017
The Federal Trade Commission (FTC) is putting the kibosh on a debt collection operation’s illegal activity. The operation had been extorting money from consumers, who did not actually owe anything,...
September 23, 2016
A criminal gang was able to successfully defraud business customers and steal £113 million, but now the group is facing a total of 27 years in jail. The organized crime...
September 22, 2016
Official figures from Financial Fraud Action U.K. (FFA UK) revealed that, in the first six months of 2016, there have been more than 1 million incidents of financial fraud, marking...
