As online transactions continue to grow, so does the risk of fraud. To combat this issue, payment networks are turning to data and artificial intelligence (AI) to uncover the truth behind transactions and identify instances of first-party fraud. Although it can be challenging to detect, first-party fraud involves consumers disputing legitimate charges to seek credit while keeping the goods or services they received.
Mastercard recognizes the need for a proactive approach to fraud prevention and has developed the First Party Trust Program. This program, set to launch later this year, utilizes enhanced transaction insights, AI, and risk modeling to combat friendly fraud. By analyzing a cardholder’s purchase history and behavior, the program will identify potential cases of first-party misuse.
Unlike traditional fraud, first-party fraud occurs when consumers use their own cards on their own devices, making it harder to detect. To address this challenge, Mastercard’s program enables merchants to submit pertinent information as part of a transaction, creating a secure channel for data sharing. Combined with Mastercard’s network-level analytics, this data will unveil insights that can indicate first-party fraud.
Visa has also implemented measures to tackle first-party fraud through its Compelling Evidence 3.0 (CE 3.0) program. This program traces a historical connection between the cardholder and merchant by analyzing key identifying fields such as user ID, device ID, IP address, or shipping address. These data points serve as evidence to support or refute the validity of a disputed transaction.
Recognizing the growing threat of first-party fraud, other providers are entering the market with their own solutions. Socure, for instance, has introduced Sigma First-Party Fraud and the First-Party Fraud Consortium (FPFC). Utilizing alternative data signals not typically found in credit reports, Socure aims to analyze and prevent first-party fraud.
FAQs
1. What is first-party fraud?
First-party fraud refers to the act of a consumer disputing a legitimate charge to seek credit while retaining the goods or services received.
2. How does Mastercard’s First Party Trust Program work?
Mastercard’s program uses enhanced transaction insights, AI, and risk modeling to identify potential cases of first-party fraud. Merchants can submit relevant information as part of a transaction, providing a secure channel for data sharing.
3. How does Visa’s Compelling Evidence 3.0 program combat first-party fraud?
Visa’s CE 3.0 program traces a historical connection between the cardholder and merchant by analyzing key identifying fields, such as user ID, device ID, IP address, or shipping address. This helps determine the authenticity of a disputed transaction.
4. How does Socure’s Sigma First-Party Fraud solution work?
Socure’s Sigma First-Party Fraud solution analyzes alternative data signals that are not typically included in credit reports. By leveraging this additional information, Socure aims to detect and prevent instances of first-party fraud.
Fraud and disputed transactions pose significant challenges for merchants, with reported costs impacting their bottom line. While 77% of merchants have identified fraud-related costs as a major source of disputes, 48% receive notifications and alerts about disputes from card networks. To mitigate risks, 20% of merchants rely on third-party data-sharing services.
With the rise of first-party fraud, payment networks are taking proactive measures to protect against fraudulent disputes. Through advanced technologies and data analysis, these networks are uncovering hidden insights to safeguard transactions and ensure a secure payments ecosystem.
Sources:
– Mastercard
– Visa
– Socure
– PYMNTS Intelligence data
As online transactions continue to grow, the risk of fraud in the payment industry also increases. To combat this issue, payment networks are turning to data and artificial intelligence (AI) to uncover the truth behind transactions and identify instances of first-party fraud.
First-party fraud involves consumers disputing legitimate charges to seek credit while keeping the goods or services they received. It can be challenging to detect because it occurs when consumers use their own cards on their own devices, making it harder to identify suspicious activity.
Mastercard recognizes the need for a proactive approach to fraud prevention and has developed the First Party Trust Program. This program, set to launch later this year, utilizes enhanced transaction insights, AI, and risk modeling to combat friendly fraud. By analyzing a cardholder’s purchase history and behavior, the program will identify potential cases of first-party misuse.
To address the challenge of detecting first-party fraud, Mastercard’s program enables merchants to submit pertinent information as part of a transaction, creating a secure channel for data sharing. Combined with Mastercard’s network-level analytics, this data will unveil insights that can indicate first-party fraud.
Visa has also implemented measures to tackle first-party fraud through its Compelling Evidence 3.0 (CE 3.0) program. This program traces a historical connection between the cardholder and merchant by analyzing key identifying fields such as user ID, device ID, IP address, or shipping address. These data points serve as evidence to support or refute the validity of a disputed transaction.
Recognizing the growing threat of first-party fraud, other providers are entering the market with their own solutions. Socure, for instance, has introduced Sigma First-Party Fraud and the First-Party Fraud Consortium (FPFC). Socure aims to analyze and prevent first-party fraud by utilizing alternative data signals not typically found in credit reports.
The impact of fraud and disputed transactions on merchants’ bottom line is significant. 77% of merchants have identified fraud-related costs as a major source of disputes, and 48% receive notifications and alerts about disputes from card networks. To mitigate risks, 20% of merchants rely on third-party data-sharing services.
Payment networks are taking proactive measures to protect against fraudulent disputes and safeguard transactions. Through advanced technologies, data analysis, and collaboration with merchants, these networks aim to ensure a secure payments ecosystem.
Sources:
– Mastercard
– Visa
– Socure
– PYMNTS Intelligence data
The source of the article is from the blog kewauneecomet.com