During International Fraud Awareness Week, ACI experts share their insights into the latest threats and sophisticated fraudulent activities so you can enhance your payment systems with intelligent solutions that tackle these challenges while maximizing revenue.
Fraudsters do not take Sundays off
Fraudsters don’t take weekends off, and as trusted fraud fighters for leading organizations worldwide, neither do we. Our goal is to provide a series of educational content and materials—starting today and continuing through Saturday—offering everyone a holistic overview of how fraud escalates and its impact on the industry:
Understanding the market landscape and the evolving challenges
Mitigating the complex threat of risk and eroding revenue
Stepping into the next era of decision-making
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The evolution of payments, the evolution of fraud
Payments are evolving rapidly as consumers make purchases faster and encounter more advanced fraud.
Achieving the fine balance between fraud, cost, and user experience
Fraudsters leverage large language models (LLM) or generative artificial intelligence (AI) to aid their activities. Organizations have stepped forward with consumer protection mandates that directly impact profitability. The tricky part is balancing security, cost of ownership, compliance(s), and user experience. Striking this balance is critical for organizations, as stringent measures can lead to customer churn or false positives, while overly lenient controls can boost fraudulent transactions.
The increase in solution providers tackling niche challenges adds to data silos, with organizations not realizing the potential of standardized and normalized data. Organizations must leverage global network intelligence (or a global consortium) alongside AI and human insights.
As AI evolves, the ability to predict and prevent is key to building a future-proof payments ecosystem. Organizations must adapt to a multilayered, end-to-end approach toward precise fraud management by enabling intelligent fraud orchestration. This calls out features and functionalities at a specific moment in the buyer’s journey to ensure that the transaction is valid, following a cost-price optimized path.
At the beginning of the buyer’s journey, the transactions are filtered and monitored for patterns, behaviors, and digital identities in real time, preventing fraud with intelligence while creating a seamless checkout experience for the user.
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Unwrap 2024 holiday checkout trends
Consumers are on the hunt for a good deal this holiday season — Are you getting their attention?
AI enhances precise fraud management by analyzing vast amounts of data in real-time to detect unusual patterns and anomalies, enabling swift and accurate identification of fraudulent activities.
Social engineering is when scammers trick consumers into revealing their credentials by making them believe they are interacting with a legitimate entity. The likelihood of receiving a message claiming to be from a delivery provider stating that your product delivery has been halted due to changes is high.
Phishing, pharming, whaling, and vishing (voice phishing) use deepfake AI tools. The goal is to steal consumer information and trick consumers into making a money transfer, also known as an authorized push payment (APP) scam. ACI’s 2024 Scamscope report reveals a significant growth rate globally. Common challenges include romance, investment, and purchase scams.
Since consumers initiate the transaction, it is up to the sending bank to verify and validate. The receiving bank shares the burden as they need to ensure comprehensive electronic Know Your Customer (eKYC) for the account receiving the money. Equally, enabling Confirmation of Payee is the safety switch to ensure that funds are directly deposited in their desired destination.
The emergence of such protocols promises consumer safety and security. To maintain trust, banks must ensure that customers are informed and educated about the surfacing threats.
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2024 Scamscope Report
The battle for trust — APP scam trends in the U.S., the U.K., Australia, India, Brazil, and the UAE.
Organizations are implementing stricter measures to protect their ecosystems with a safe and secure environment. However, there have been numerous data breaches and a significant increase in fraudulent activities linked to data sold over the dark web.
Synthetic identities are a mix of real and fake information to build trust with an organization’s internal system and create a “trusted” account to defraud the organization further. ACI’s internal data shows that with the increased number of data breaches, there is also an increase in testing credentials via account takeover or bot attack attempts. This increases synthetic identity creation once the real information has been vetted through these tactics. Each synthetic identity attempt costs nine times more than an average fraud value (or $1,800).
Synthetic identities threaten organizations across the payments ecosystem. For an issuing bank, it could mean a mule account for money laundering activities, while for a merchant, it could mean receiving consumer financing for bigger ticket items.
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The invisible synthetic identity heist
With the advent of modern challenges and generative artificial intelligence (GenAI) tools, we’ve seen an increase in tools that fuel fraudsters’ malicious intent, making their efforts appear as genuine as possible.
Spotlight on synthetic identity fraud (SIF) and AI’s role in the fight
Artificial intelligence helps combat synthetic identity fraud by analyzing digital data, automating decisions, and evaluating applications in real time to flag fraud and suspicious activity for review.
The emergence of inbound compliance, mandates, and the looming threat
With all the challenges and threats discussed here, implementing new compliance measures is the most time-consuming and expertise-requiring challenge. But why are they needed?
In essence, compliance and mandates are enforced by organizations—governmental or non-governmental—to spotlight challenges that organizations are missing or failing to address. An example is the UK Payment Services Regulator’s Reimbursement Mandate, which focuses on checks for receiving banks while splitting the scam costs between sending and receiving parties.
The world can expect more stringent measures and compliance to ensure consumer safety with AI-accelerated threats in the mix. Ramping up the effort to understand and implement the requirements while boosting performance is challenging but not impossible.
Technology providers in the payments world are the trusted partners for organizations seeking to elevate their performance while reducing the compliance burden.
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APP Frauds & mandatory reimbursement: What it means for you
The sophistication of these scams, combined with their reliance on the victim’s actions, makes APP fraud a complex issue for financial institutions and individuals alike.
Minimizing compliance complexities to enable seamless data-sharing
The rise in consumer data exposure is revolutionizing intelligence gathering and sharing. Knowledge sharing across the ecosystem is essential to identifying underlying threats; however, compliance requirements add to business costs and complexities.
Existing technologies are shaping the world of intelligence sharing. One of these is signals: the next step in intelligent decision-making. Signals—a weighted average of multiple scores—provide the actual business user with the result without needing to learn domain expertise. Coupled with the outcome explanation, signals focus on mitigating biases and providing proof of the outcome. A signal with comprehensive intelligence and data leads to precise, real-time decisions in a world where real-time payments are accelerating and driven by many factors, such as financial inclusivity, cost savings, etc.
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Pivoting to the new way of intelligent decision-making: The journey toward convenience
As new mandates and schemes have emerged, payment types and methods have also evolved, incorporating nuanced approaches tailored to various regions.
AI has been ubiquitous in fraud management since the emergence of neural networks and anomaly detection for debit transactions nearly 26 years ago. In the 2020s, advanced machine learning models have accelerated adoption. LLMs offer the opportunity to hone the concept of hyper-personalization for organizations.
But what is hyper-personalization? By concept, hyper-personalization provides granular insights into a consumer or account holder’s preferences and behaviors. This guides organizations—such as banks, merchants, and billers—to leverage intelligence to provide tailored and personalized offerings and services. These include personal finance management, real-time credit checks, real-time onboarding, and eKYC. The intent is to enhance relationships, protect confidence and trust, and achieve revenue objectives.
How does one achieve hyper-personalization? It involves leveraging global intelligence across the payments ecosystem, AI, and human insights to understand preferences without compromising or revealing personally identifiable information. This usually involves a platform that can digest numerous historical points within its ecosystem, preserve the insights, and feed the existing payments infrastructure to provide:
Precision for real-time risk mitigation
Hyper-personalization of services
In a world where threats are increasingly complex, and consumer needs are diverse, vendors often focus on specific challenges. By accelerating the integration of human insights, data intelligence, and AI, organizations can protect their reputation and revenue. As consumers become more aware of the importance of safeguarding their sensitive information, ensuring the security of their profiles boosts their confidence in completing transactions safely and securely.
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Digital data multilayers.
Paving the way to profit with intelligent decisioning
Explore how transaction intelligence can help ecommerce businesses work faster.
AI enhances precise fraud management by analyzing vast amounts of data in real-time to detect unusual patterns and anomalies, enabling swift and accurate identification of fraudulent activities.
ACI Worldwide is powering the payments ecosystem while keeping it safe and secure against financial crime. Its comprehensive overview of the consumer journey by serving the ecosystem empowers its customers with intelligence that drives precise decision-making while keeping consumer confidence and trust intact. Fueled by ACI’s ability to accelerate the correlation between its patented AI technology, compliant data intelligence, and strategic specialists, it enables organizations to remain strategic while achieving desired outcomes.
Keep fraudsters and bad actors at bay while ensuring that your systems are up to date, boosting results, and mitigating risks throughout the year with our dedicated checklists.
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ACI Worldwide fraud checklist
Boost consumer confidence and trust this season with our essential checklist to optimize payment processing and safeguard against fraud risks.
ACI Worldwide powers electronic payments for financial institutions, retailers and processors around the world with its broad and integrated suite of electronic payment software.
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