Uniting against rising fraud

Consumers in the US and the UK lose billions of dollars annually due to fraud, which is still on the rise. Although it is evident that the financial sector needs to strengthen its defences against fraudsters, it seems that existing levels of cooperation are insufficient, and more needs to be done to safeguard consumers.

In response, the global payments industry’s voice, Payments 20 (P20), has released its most recent report, “Public-Private Data Exchange for Fraud Prevention: Best Practise Recommendations,” which calls for improved data exchange between the public and private sectors utilising innovative techniques and technologies in order to combat fraud that is becoming more sophisticated.

Leading organisations like J.P. Morgan, McKinsey & Co., the Federal Reserve, FIS, Fiserv, UK Payment Systems Regulator, and Pay.UK have contributed to the paper on ways that the public and private sectors may collaborate more closely to combat the fraud epidemic.

The Federal Trade Commission (FTC) reported in 2022 that US customers had lost around $8.8 billion to fraud, a rise of more than 30% from the year before. Last year, thieves in the UK took more than £1.2 billion, or more than £2,300 every minute.

Despite efforts to strengthen cooperation between the public and private sectors, closer cooperation is still essential given the current worldwide strategy to preventing fraud. Due to the fact that data is typically held in numerous places, a convoluted, tiered, and separated system has emerged that demands connection with outside parties. GDPR’s privacy protections hamper real-time transaction data collaboration. This makes it harder to catch fraud quickly.

Technological developments and the widespread use of artificial intelligence (AI) and new privacy-enhancing technologies (PETs) could offer additional protection against contemporary cybercriminals in addition to helping to allay regulatory worries about complying with privacy regulations by safeguarding consumer data.

“In this battle, data is critical”

The CEO of P20, Duncan Sandys, stated: “Fraudsters are more organised than ever and understand the value of data in their schemes to defraud gullible customers and companies.

It’s getting harder to stop the criminals, but if the sector could gather data sets and work together more internationally, its defence operations could advance significantly. By making things difficult for thieves, organisations can deter them from operating as much and enable businesses to fortify their defences against fraudsters.

“We have collaborated with top financial institutions, fraud specialists, and regulators to gather these recommendations, which can help shield consumers from the severe financial and psychological effects of falling victim to fraud. Data is crucial in this fight.”

P20’s suggestions

Additionally, P20 has outlined a number of suggestions to aid in the fight against fraud and illegal activity.

• To assist in identifying suspected fraud, develop and agree upon a protocol and platform for the safe, real-time data sharing between financial institutions, governmental organisations, law enforcement, IT businesses, and telcos. Regulations governing appropriate data sharing between entities and standard data formats ought to be released by the government.
• Suspicious Activity Reports (SARs) from law enforcement should be available to the industry For Your Eyes Only.
• Governments should provide incentives to businesses so they may develop and advance AI machine learning technology, which can be used to identify fraud. As a result, payments throughout the ecosystem will be more securely safeguarded and the private sector will be able to invest in additional AI capabilities.
• Permit the private sector to access government data for authentication. Large amounts of data are held by the public sector, which may be useful in preventing fraud.
• the establishment of a forum headed by regulators to enable frequent communication on fighting fraud with the business sector in order to promote understanding and confidence.
• Government and business should collaborate to create a fraud prevention protocol that outlines the conditions under which privacy law provisions may be superseded.