Payment processing is much more seamless now than it was even a few years ago. The pandemic accelerated the pace of digitizing payments, and peer-to-peer payment networks continue to grow in popularity. But this has also meant that consumers and banks have faced a growing number of innovative payments scams. 

 In a recent PaymentsJournal podcast, Sudhir Jha, Executive Vice President and Head of Brighterion, a Mastercard company, and Tracy Kitten, Director of Fraud and Security at Javelin Strategy & Research, discussed how generative AI is changing the payments fraud landscape and what we should expect in  the year ahead

PaymentsJournalFighting Payments Fraud in a World of Social Media and AIPaymentsJournal Fighting Payments Fraud in a World of Social Media and AIPaymentsJournaljQuery(document).ready(function ($){var settings_ap27066485 = { design_skin: "skin-wave" ,autoplay: "off",disable_volume:"default" ,loop:"off" ,cue: "on" ,embedded: "off" ,preload_method:"metadata" ,design_animateplaypause:"off" ,skinwave_dynamicwaves:"off" ,skinwave_enableSpectrum:"off" ,skinwave_enableReflect:"on",settings_backup_type:"full",playfrom:"default",soundcloud_apikey:"" ,skinwave_comments_enable:"off",settings_php_handler:window.ajaxurl,skinwave_wave_mode:"canvas",pcm_data_try_to_generate: "on","pcm_notice": "off","notice_no_media": "on",design_color_bg: "111111",design_color_highlight: "ef6b13",skinwave_wave_mode_canvas_waves_number: "3",skinwave_wave_mode_canvas_waves_padding: "1",skinwave_wave_mode_canvas_reflection_size: "0.25",skinwave_comments_playerid:"27066485",php_retriever:"https://www.paymentsjournal.com/wp-content/plugins/dzs-zoomsounds/soundcloudretriever.php" }; try{ dzsap_init(".ap_idx_438017_29",settings_ap27066485); }catch(err){ console.warn("cannot init player", err); } });

Leaving Information on the Table

Social media has changed many things about payments, starting with the fact that they can now be facilitated directly from an app like Facebook. That has opened up new avenues that institutions need to keep a careful eye on. On top of this, consumers have become more comfortable with leaving information in the open on various social apps. Many financial institutions have been facing more challenges when it comes to intervening or detecting fraudulent or suspicious activity through these channels. 

Social media adds several new wrinkles to fighting fraud. “If you go to a restaurant and post your food before you eat, that gives a fraudster a ton of information about you to make their fraud attempts much more believable and effective,” Jha said. “The potential criminal not only knows the location, then they know which business you interacted with, and even what you ate.”

With all this information, a fraudster can easily create a believable approach to the customer: “You ate at my restaurant yesterday and you paid X dollars, but that was incorrect. To get your refund, click on this link.” That link can be part of a phishing attempt. By collecting all that personal information, the criminal can even become friendly with the target and create a bond that sets up a later scam.

While scams have always been around, AI makes such approaches more scalable. It used to be much harder for bad actors to collect enough information to personalize attacks. Now all of that can be automated using AI. To counter these attempts, businesses need to embrace sophisticated solutions. Checking a few touchpoints and asking a couple of questions will not be enough to fight the scams of today.

“We’ve talked a lot about regulation and halting advancements in AI, which sounds wonderful in theory,