Mastercard Inc. has introduced a new cutting-edge tool powered by artificial intelligence (AI) that assists banks in effectively identifying potential instances of customers attempting to transfer funds to fraudsters. Nine major banks in the UK, including Lloyds Banking Group Plc, Natwest Group Plc, and Bank of Scotland Plc, have already signed up to implement the Consumer Fraud Risk system, according to Mastercard.

Trained on extensive transaction data spanning several years, this innovative tool predicts whether individuals are trying to transfer funds to accounts associated with “authorized push payment scams.” Such scams involve deceiving victims into transferring money to accounts falsely posing as legitimate payees, including family members, friends, or businesses.

The introduction of this tool aligns with UK banks’ preparations for new regulations from the Payment Systems Regulator, which will mandate them to compensate customers affected by authorized push payment scams starting in 2024. Previously, banks were not liable for this type of fraud, although some voluntarily agreed to reimburse victims.

Ajay Bhalla, President of Cyber and Intelligence at Mastercard, highlighted authorized push payment scams as a significant problem that banks have historically struggled to detect due to the lack of compromise on victims’ accounts. As the transfers are voluntarily initiated by clients, they often bypass many security checks typically used to identify unauthorized payments or fraud.

With Mastercard’s AI-powered system, banks gain a powerful tool to combat fraudulent money transfers effectively. By leveraging advanced data analytics and AI algorithms, the tool enhances fraud detection capabilities, enabling banks to better safeguard their customers’ financial transactions.

This move by Mastercard signifies a pivotal step in strengthening the defenses of banks and customers against the ever-evolving landscape of financial fraud. The AI-powered tool presents a significant advancement in the ongoing battle against authorized push payment scams, demonstrating the industry’s commitment to proactive fraud prevention measures.