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Payment fraud soared to record levels in early 2023, and in response, e-commerce, retailing, and mass merchants rely more on AI-based fraud prevention systems to outsmart attackers.
Visa’s Biannual Threats Report published today found that nearly 460 ransomware attacks worldwide happened in March 2023 alone, a staggering 91% increase over February, and 62% higher compared to the same period in the previous year.
Visa’s research team also found that fraudsters stole over $1.3 billion in cryptocurrency in early 2022 alone by exploiting vulnerabilities in smart contracts. Enumeration attacks jumped 40% in recent months, and 58% of fraud investigations involved online merchants. Brick-and-mortar retailers accounted for just 20%, proving that e-commerce remains a high-priority target.
With e-commerce and online retail transactions setting new revenue records year-over-year, ransomware and payment fraud attackers are developing entirely new AI-based techniques to defraud merchants, consumers, and suppliers using a combination of social engineering, phishing, and identity-driven attacks to take control of accounts.
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Attackers using weaponized AI to breach payment ecosystems
Visa observed that attacks are becoming increasingly lethal and undetectable due to attackers fine-tuning payment fraud strategies through generative AI tools. FraudGPT is an example of the latest generation of attack tools being sold on the dark web.
VentureBeat has learned that gaming firms see increases in Account Takeover (ATO) attacks proliferating across e-commerce today, driven by advanced AI attack strategies. Businesses that rely on real-time approvals of small transaction amounts to keep customers engaged are often targets. Transactions must be approved instantly and at scale for a game to succeed financially. Fortunately, AI-based fraud systems can analyze a transaction in less than a second, considering the many data points from other current and past transactions to see if it is real or fraudulent.
“While we are pleased by the lower-than-expected fraud rate over the last few months, this edition of the Biannual Threats Report continues to underscore just how savvy fraudsters continue to be,” said Paul Fabara, Chief Risk Officer at Visa. “The same way criminals take advantage of technology advances, so does Visa, and the $30 billion of fraud prevented in the last six months alone is a great testament to that.”
Visa’s AI-driven deterrence strategy is paying off
One of the fascinating findings from the report is how Visa is using a series of AI-based tools and techniques to battle payment fraud across sectors worldwide. Its 24/7 Risk Operations Center relies on a continual stream of real-time telemetry data to provide transaction monitoring and threat analysis to their clients globally. The center responded to nearly 2,000 fraud incidents, blocking over 53 million presumed fraudulent transactions worth $32 billion in six months.
Visa has extensive experience and has made significant investments in AI to reduce fraud. In April 2022, Paul Fabara, Chief Risk Officer for Visa, wrote, “In the past five years, the company has spent over $9 billion to boost cybersecurity and reduce fraud. With an investment of $500 million in artificial intelligence and data infrastructure, for example, Visa can power over 60 different AI capabilities to automate much of the heavy lifting in fraud detection — a time-consuming task that many clients do manually today.”
Staying ahead of the threats with AI
As digital commerce expands exponentially, payment fraud continues to escalate rapidly. From rogue attackers to Advanced Persistent Threat (APT) groups, all unleash increasingly sophisticated, AI-powered attacks that exploit vulnerabilities across global payment ecosystems. Visa’s latest Biannual Threats Report shows that with the right strategy, every business can stay ahead of the threats and rely on AI to outsmart attackers.
E-commerce, retailers, and mass merchants can’t afford to lose the AI war to attackers. With weaponized AI on the rise and attackers fine-tuning their tradecraft, payment providers must double down on AI investments to protect their payment ecopsystems against attacks. Visa’s report provides a 360-degree view of the landscape and guides those companies looking to build an AI-driven roadmap to counter these threats.
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