Mastercard expands AI initiative that detects scams in real-time

Scheme comes after the global payment firm's acquisition of threat intelligence company Recorded Future for $2.65 billion

The Mastercard initiative helps banks identify and halt potentially fraudulent payments before the money leaves an account. Reuters

Mastercard has expanded an initiative that enables banks to spot fraudulent payment scams as they are happening.

The scheme, which employs artificial intelligence to scan a range of data points related to transactions has been up and running since last year. It helps British banks identify and halt potentially fraudulent payments before the money leaves an account.

Mastercard is extending the scheme to include bank accounts to which the potential scam payment is set to arrive. Using AI, all the data related to a transaction can be collated into a risk score that both the sending and receiving bank can get in real-time.

The scams, officially known as authorised push payment fraud, happen when a person believes they are paying a legitimate account or organisation but have been fooled by a fake website, email, text or phone call.

Johan Gerber, executive vice president for security solutions at Mastercard, said banks are being provided with “additional lines of defence – helping them better identify and stop scams in their tracks”.

Fraudsters often use so-called money-mule accounts, which are opened and used by third parties to give them an image of legitimacy. However, scammers will pay the money-mules a cut of the fraudulent payment for using their accounts before moving the funds on. Mastercard's expanded AI-based will assist banks in identifying possible money-mule accounts as scams occur.

Mandatory reimbursement

Many UK banks are already signed up to a voluntary code that reimburses people who fall for fraudulent payment scams. From October, however, a mandatory code will come into force overseen by the Payment Systems Regulator (PSR), which will force banks to reimburse victims of payment scams, unless the customer has been grossly negligent.

The code and Mastercard's expanded initiative are part of the finance industry's efforts to crack down on fraud and cybercrime. Mastercard recently announced it is acquiring the global threat intelligence company Recorded Future from Insight Partners for $2.65 billion. The company has more than 1900 clients across 75 countries, including the governments of 45 countries and more than half of the firms in the Fortune 100.

Mastercard and Recorded Future were already collaborating on the initiative before the deal, and the tie-up will “enable everyone to feel safer in their daily lives,” the chief executive of Recorded Future, Christopher Ahlberg, said.

The deal, which is subject to regulatory review, is expected to be finalised by the end of the first quarter of next year.