Fraud detection

Theft of paper checks and their use in identity theft constitute a major blind spot in the private sector's fraud detection networks. Banks and regulators need to come together to find solutions.

First-party fraud — customers claiming they never made a transaction when they know full well they did — is a growing problem for banks. An emerging host of vendors including Socure are offering machine learning models that detect this.

To reverse the trend in payments fraud, regulators and the private sector must work together to expand how we define verification. It must be a dynamic, intelligence-driven process embedded at every point of the payment journey.

Listen to Gasan Awad, SVP, Fraud Director, Enterprise Fraud Product Management at PNC Bank, Chris Briggs, Chief Product Officer at Mitek and Jay Leal, CIO at Vantage Bank.

The bank partnered with fraud prevention company Threat Fabric to create a taxonomy the companies hope will make it easier to communicate about fraud.

At a New York Fintech Week event, speakers urged fintechs to better understand the criminal mindset and to use artificial intelligence to detect and thwart fraud.

A survey by American Banker indicates that check fraud is the top fraud concern for banks, especially smaller ones. This is driving spending to prevent it.

The Knoble, a nonprofit that brings banks, credit unions, payment networks and law enforcement together to detect elder and child exploitation and human trafficking, has worked with more than 600 banks.

California has a pending law that would hold banks liable for three times the amount of a loss if they had reason to suspect financial exploitation of an older customer and did nothing about it.

Machine learning has a firm place in banks' fraud and scam detection work. But some are also experimenting with using generative AI to research and handle claims.

Specialized large language models should be harnessed to help financial institutions identify and halt fraudulent activity. The best model would involve regulator-approved pooling of anonymized customer data.

Companies lose an estimated 5% of their revenue each year due to fraud, according to a report from the Association of Certified Fraud Examiners.

When customers are targeted directly with fake text messages that lead to account takeover, artificial intelligence, and in some cases generative AI, can play a role in fighting the fraud, experts say.

Fraudsters are leveraging advanced artificial intelligence to impersonate customers and deceive financial institutions, but the industry is fighting back with detection systems.

One area of focus for the bank is using advanced artificial intelligence to detect business-email compromise. The payment messaging network Swift and online gambling host Caesars are also using AI to stop people from gaming their systems.