How new technology has boosted the consumer fraud fightback
Fraud is a crime that devastates millions of lives across the UK, costing consumers over £1bn every year. As fraudsters develop ever more sophisticated strategies, Politics Home finds out how Mastercard is supporting the fightback by investing in the cutting-edge technology that can keep people in the UK safe.
Most of us are all too familiar with unsolicited texts, emails, and calls intended to trick us into making payments or sharing confidential login information.
Fraud is now the most common crime in England and Wales, accounting for a staggering 40 per cent of all crimes committed. The latest data has highlighted the financial cost to almost three million UK consumers, with fraud related losses exceeding £1bn in 2022. That is equivalent to around £2,300 stolen every minute of last year.1
To support the fightback against increasingly sophisticated fraudsters, Mastercard has been leveraging the latest technology to identify and stop suspicious transactions. Mastercard’s cutting-edge Consumer Fraud Risk system employs artificial intelligence that has been trained on years of transaction data to identify suspicious activity. It then intervenes to block transfers where fraud is thought to be taking place.
Mastercard’s technology is now being used by nine of the UK’s biggest banks, including some of the best-known names on the high street. In the last 3 years, Mastercard has prevented £28.5 billion ($35 billion) globally in potential consumer fraud losses – and a record £16 billion ($20 billion) in 12 months.2
Kelly Devine, UK and Ireland President at Mastercard, explained to Politics Home how new approaches like the Consumer Fraud Risk system are urgently needed as criminals constantly look for new ways to defraud millions of people in the UK each year. “The shift online has brought enormous benefits to consumers, businesses, and public services, as we’re able to manage our money and access products and services whenever and wherever we want,” Devine says. “But criminals will always seek out new ways to operate, and sadly, most of us will have been a victim, or know someone who’s been a victim of fraud.”
The impact of online fraud goes far beyond financial losses, with a growing body of evidence about the devastating emotional impact that it has on victims. According to Ofcom, two thirds of those who have lost money to fraud report a negative impact on their mental health.3
The sheer scale of consumer fraud also means it is firmly on the agenda for policymakers and legislators. Emma Hardy MP, who sits on the influential Treasury Select Committee, told Politics Home that she regularly hears harrowing stories from constituents about the impact of online fraud on their lives. Hardy’s view is one that is shared by Baroness Morgan who chaired the House of Lords inquiry into the Fraud Act 2006 and Digital Fraud. “Fraud is not a victimless crime; it involves a severe loss of trust,” she explained to Politics Home. “It can involve life-changing amounts of money being stolen, and it is truly devastating for those who have been victims.”
And as technology continues to develop, further risks will emerge as fraudsters seek new ways to defraud people in the UK. This constantly changing threat landscape poses a significant challenge for the financial sector, consumers, regulators, and government. This is illustrated by the sharp increase in specific types of fraud – for instance, authorised push payment scams (APPs) where victims are tricked into moving money into what they believe is a trusted account.
"In my work as a constituency MP, I have seen first-hand the awful effects of this kind of fraud on its victims,” she tells us. “It can be absolutely devastating. Their trust has been abused and they are left blaming themselves long after the impact of the financial loss has subsided.”
– Emma Hardy MP
In 2022, UK victims lost £484m to APP scams. It is this type of fraud that Mastercard’s Consumer Fraud Risk system is addressing.4
“Fraudsters are increasingly shifting their tactics to impersonation scams, where they trick someone into sending them money,” Devine explains. “The challenge is to identify this type of fraud before funds leave the customer’s bank account. We’ve been investing in research and development to come up with new technology to do that.”
The development of new technologies that can reduce the number of people falling victim to fraud is something that Emma Hardy MP welcomes. “I welcome every effort made by financial service providers to protect their customers from these remorseless criminals.”
However, Devine cautions that, while new technology is making a real impact in the fight against fraud, industry and regulators cannot stand still as the threat landscape continues to evolve. “No one organisation can solve this challenge alone,” she explains. Businesses, government, regulators, and consumer groups need to work hand in hand to ensure people are protected.
The signs are that close collaboration and coordinated action are already delivering positive results for consumers. With the recent publication of the government’s Fraud Strategy, and new innovations like the Mastercard system, there is a growing momentum behind efforts to move from addressing the consequences of fraud to stopping it at its source.
The Prime Minister’s anti-fraud champion, Anthony Browne MP, told Politics Home he sees early intervention as vital if the public is to be protected.
“A key priority in the government’s Fraud Strategy is to block fraud at source and the financial service and tech industries have a key role to play in achieving this,” Browne explains. “That’s why I am working at pace to ensure close collaboration between these sectors and central government.”
Such collaboration is essential if people in the UK are to be protected from the technologically adept criminals who prey upon them.
How Mastercard AI is protecting UK customers
The fastest growing category of payment fraud is ‘authorised push payment scams’ where a victim is tricked into moving money into an account posing as a person or business that they trust.
But a new Mastercard innovation is now being used by major UK banks to predict whether the transaction is legitimate before any money leaves the customer’s account. The new Consumer Fraud Risk system has analysed over five years of transactions and used that data to train artificial intelligence algorithms to recognise suspicious behaviour.
A spokesperson from NatWest told Politics Home that they are already seeing benefits from the new system. “This tool is helping to level the playing field, by providing banks like NatWest with insight into the riskiness of the payee to work alongside existing intelligence that the bank holds on the payer,” NatWest tells us. “This allows us to make more accurate decisions as to whether a payment is genuine or potentially fraudulent, and in turn enables us to better protect our customers from falling victim to this devastating and destructive crime.”
Paul Davis, Director of fraud prevention at TSB, is also optimistic that the new system will make it more difficult for APP scammers to defraud victims. “We know from our customers that fraudsters are using increasingly sophisticated methods to convince them to make online transfers,” Davis tells us. “Early intervention is critical and our partnership with Mastercard is delivering just that by identifying fraudulent accounts and preventing payments from reaching them.”
1. ukfinance.org.uk | annual fraud report | 2022
2. www.mastercard.com/news/press/2023/july/mastercard-leverages-its-ai-capabilities-to-fight-real-time-payment-scams/
3. ofcom.org.uk | news centre scale and impact of online fraud revealed | 2023
4. www.mastercard.com/news/press/2023/july/mastercard-leverages-its-ai-capabilities-to-fight-real-time-payment-scams/
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