The Rise of AI Tools and Real-Time Payments Fuels Surge in Fraud – Industry Consortiums Form to Combat Threat

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The Rise of AI Tools and Real-Time Payments Fuels Surge in Fraud – Industry Consortiums Form to Combat Threat

The rise of artificial intelligence (AI) tools and real-time payments in the United States has resulted in a surge of fraudulent activities. Fraudsters are taking advantage of the easy accessibility of AI technology and the speed of real-time payments to carry out their illicit schemes. This alarming trend has prompted the formation of industry consortiums aimed at combating this growing threat.

The transition from an analog to a digital world has opened the floodgates for fraud, which has become an unfortunate and pervasive theme in our everyday lives. Both consumers and businesses are affected by this, and it raises questions about liability and the level of friction introduced into the payment process to mitigate such activities. In a world built on trust, businesses are taking proactive measures to tackle this monumental challenge facing our digital economy.

Trustmi, a payment security platform, recently made headlines by securing $17 million in funding. This end-to-end security platform is dedicated to addressing the complex issue of protecting payments. Gili Raanan, founder of fintech company Cyberstarts, stated that safeguarding payments is one of the most painful and complex challenges for any modern organization. With the rollout of real-time payments by The Clearing House on their RTP Network and the availability of AI tools and large language models that can run on local machines, the stage is set for an influx of fraud.

To address this threat, several industry consortiums have emerged over the past month. SardineX, led by Soups Ranjan and his team of fraud squad Sardines, is a group that includes prominent organizations such as Chesapeake Bank, Visa, Airbase, Blockchain.com, Alloy Labs Alliance, iLex, and Novo. Their primary objective is to curtail payment fraud.

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Another consortium, Beacon, is a collaborative anti-fraud network that enables financial institutions and fintech companies to share crucial fraud intelligence via API across Plaid. Plaid, along with 10 other founding members including Tally, Credit Genie, Veridian Credit Union, and Promise Finance, is spearheading this effort.

Mastercard is leading its own AI-related initiatives in the United Kingdom, partnering with nine prominent banks such as Lloyds Bank, Halifax, Bank of Scotland, and Monzo.

While the formation of these consortiums is a positive development, there is a need for greater collaboration to tackle this issue effectively. The sharing of data among consortiums is essential to ensure a unified front against fraud. Instead of individual consortiums working in isolation, it would be more beneficial for major players like Visa and Mastercard to share data across networks.

Two main factors impede our ability to address this issue comprehensively. Increasing data-related regulations and associated legal, security, and privacy risks are barriers to data sharing. However, mature clients understand that secure data flow among individuals, organizations, and governments can lead to better decisions and improved outcomes for businesses and society as a whole.

Given that AI and real-time payments are the driving forces behind the surge in fraud, collaboration between the private and public sectors is necessary to combat this threat effectively. Disjointed and ineffective solutions that only address niche use cases are not the answer. Further regulation alone will not suffice. A defensive AI strategy, with comprehensive participation from all relevant platforms fighting fraudsters on the frontlines, is crucial.

In conclusion, the rise of AI tools and real-time payments has fueled a surge in fraud. Industry consortiums have formed to tackle this growing threat, but greater collaboration and data sharing are needed to address the issue effectively. A comprehensive defensive AI strategy, along with a united front from relevant platforms, is necessary to protect our digital economy from the detrimental effects of fraud.

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Frequently Asked Questions (FAQs) Related to the Above News

What is causing the surge in fraud?

The surge in fraud is primarily being caused by the rise of artificial intelligence (AI) tools and real-time payments. The accessibility of AI technology and the speed of real-time payments have made it easier for fraudsters to carry out illicit activities.

How are industry consortiums addressing this issue?

Industry consortiums have emerged to combat the growing threat of fraud. These consortiums, such as SardineX and Beacon, bring together prominent organizations in the payment industry to work together in curbing payment fraud. They aim to share crucial fraud intelligence and collaborate on finding effective solutions.

What is Trustmi and its role in combating fraud?

Trustmi is a payment security platform that recently secured $17 million in funding. It is dedicated to addressing the complex issue of protecting payments. Trustmi plays a crucial role in developing end-to-end security solutions to mitigate fraud in the payment process.

Who are some of the members of the industry consortiums?

SardineX includes organizations such as Chesapeake Bank, Visa, Airbase, Blockchain.com, Alloy Labs Alliance, iLex, and Novo. Beacon is supported by Plaid, with founding members including Tally, Credit Genie, Veridian Credit Union, and Promise Finance.

Why is collaboration and data sharing important in combating fraud?

Collaboration and data sharing among industry consortiums and major players such as Visa and Mastercard are essential to ensure a unified front against fraud. Sharing data enables a more comprehensive understanding of fraud patterns and aids in developing effective preventative measures against fraudulent activities.

What are the barriers to data sharing in combating fraud?

Barriers to data sharing include increasing data-related regulations and associated legal, security, and privacy risks. These factors make it challenging to share data among organizations and governments. However, it is important to prioritize secure data flow, as it can lead to better decisions and improved outcomes for businesses and society as a whole.

Is regulation alone enough to combat fraud?

No, regulation alone is not sufficient to combat fraud. While regulations play an important role in setting standards and guidelines, a comprehensive defensive AI strategy, accompanied by collaboration between the private and public sectors, is necessary to effectively protect the digital economy from the detrimental effects of fraud.

Please note that the FAQs provided on this page are based on the news article published. While we strive to provide accurate and up-to-date information, it is always recommended to consult relevant authorities or professionals before making any decisions or taking action based on the FAQs or the news article.

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