AI in Payment Providers Leverage Data, Battle v. First-Party Fraud

First-party fraud is, increasingly, guaranteeing the first line of defense for payments networks, using data and AI to determine what is really happening with transactions and whether consumers are being fraudulent. Starting conflicts.

Next, picture the cardholder challenging a legitimate charge on their account. Mastercard noted in a Online posting Monday (March 18) that Challenges can be attributed to several scenarios: The user may have honestly forgotten that a purchase was made. They may have been confused about the details of their statements. Alternatively, and this is where the fraud comes in, the customer may be trying to get credit for a transaction that was over and above, and may have purchased goods or services. Trying to maintain what was ordered and delivered.

MasterCard said its First Party Trust program, which It was announced in October It will be launched later this year. As noted at the time, the program uses “better transaction insights,” artificial intelligence (AI) and risk modeling to combat friendly, or first-party, fraud.

Beyond the card and device

MasterCard’s Monday posting noted that it can be difficult to identify when first-party fraud is occurring, as consumers are using their own cards, on their own devices. The new program, Payment Network said, “provides a secure channel for merchants to collect relevant information as part of a Mastercard transaction. Combined with Mastercard’s network-level analytics, this data card will reveal insights into the holder’s purchase history and behavior that may indicate first-party abuse.”

Beginning with an initial rollout in states this year, merchants have the option to submit this data at the time of purchase or at the initiation of a dispute. Advanced technologies, MasterCard said, “increase the detection of true third-party fraud – and subsequently strengthen the case against dishonest chargebacks.”

separatelyAnd as detailed last year, Visa’s Enforced Evidence 3.0 (CE 3.0) — a change to its dispute resolution program that launched last April — uses data to trace the “footprint” established between a cardholder and a merchant, and key Identifier fields that correspond to historical transactions and transactions. Controversial

Key fields, as we reported last year, include user ID, device ID, IP address, or shipping address on at least two non-fraud transactions that occurred 120 to 365 days ago. These data points are used to prove the historical relationship with the cardholder and to prove the new transaction being questioned.

Other providers are joining the fray: That same month MasterCard launched its own program, SoCure. He announced himself First Party Fraud Solutions, Sigma First Party Fraud, with the First Party Fraud Consortium (FPFC). The consortium had more than 50 million active accounts at launch and said it aims to add another 200 million accounts.

Socure FPFC aims to detect and prevent first-party fraud by analyzing alternative data signals that aren’t typically tracked in traditional credit reports, Socure said last October.

In PYMNTS Intelligence Data, Reporting Dispute Prevention Solutions found that 77 percent of merchants said fraud and costs from disputed transactions are one of the biggest sources of dispute-related pain.

In addition, 48% of merchants surveyed said they receive notifications and alerts about disputes from the card network.

And as many as 20% of merchants use third-party data sharing services to prevent conflicts.

Leave a Comment