Inside Visa’s AI-powered war against holiday fraud

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The holiday shopping season is a double-edged sword for payments leader Visa. While transaction volumes surge, providing a sales boost, the period also kicks off a relentless assault from cybercriminals looking to exploit vulnerabilities and steal consumer data.

“We know from historical experience that the holiday shopping season is fraudsters’ Super Bowl given the increase in spend and transactions,” said Paul Fabara, Visa’s chief risk officer, in an exclusive interview with VentureBeat. “In particular, online shopping sees a significant uptick and is also the channel disproportionately targeted by bad actors.” 

According to Visa’s latest biannual threats report, fraudsters are armed with increasingly potent weapons, including artificial intelligence tools like ChatGPT that can automate and scale malicious activities.

AI vs. AI Crimefighting

“With new products like ChatGPT, we’re quickly seeing the potential for AI’s positive and negative uses,” Fabara said. “As with any new technology, threat actors have quickly identified ways to exploit AI and Advanced Language Models (ALM) for fraud.”

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The report warns that these AI systems make it easier for criminals to create convincing phishing lures, develop malware that evades detection, and socially engineer victims — all at a massive scale.

To counter these rapidly evolving threats, Visa has invested heavily in its AI-powered defense systems. 

“Over the last 10 years, Visa has spent more than $3 billion on AI and data infrastructure to enable the safer, smarter movement of money and to proactively identify and prevent fraud,” Fabara told VentureBeat. “Today, we have several hundred AI models in production, powering over 100 products.”

This AI-enabled anti-fraud arsenal analyzes transactions in real time, evaluating up to 500 unique risk factors within 300 milliseconds to pinpoint criminal activity. According to Fabara, new AI innovations will also “help fraud tools make more informed and accurate decisions” during the high-risk holiday period.

The Human Element

While AI versus AI crimefighting represents the bleeding edge, Fabara emphasizes that human intelligence also plays a key role at Visa.

“We collaborate with clients as well as other entities across the payments ecosystem, including merchants, to identify and investigate potential fraudulent activity,” he explained.

Fabara also stressed the importance of consumer awareness and vigilance.

“The first step in remaining safe is being proactive and aware of potential threats,” he said. His tips include using multi-factor authentication, creating complex and unique passwords, and watching out for sophisticated phishing tactics.

According to a new McKinsey report, e-commerce sales have doubled in the past five years and are expected to almost double again by 2026. With e-commerce sales exploding, the stakes in this holiday fraud battle only continue to rise. But with veteran leaders like Fabara manning the front lines, Visa and its clients can face the “Cybercriminal Super Bowl” with confidence.

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