Credit cards frauds are on rise, should we stay worried about it? - 2024-09-12

Credit card fraud is just becoming more and more common due to advancements in AI, it works for both, a tool for cybercriminals and as a method for detecting fraudulent transactions. The rise in fraud alerts, is just frustrating for customers, but is an essential against the growing sophistication of these attacks. AI has helped cybercriminals to create thousands of fraudulent accounts quickly, making it harder for financial institutions to keep up without also employing advanced detection systems.

So obviously when the financial institutions update their fraud detection systems, more alerts are being generated, sometimes even flagging legitimate transactions. While false alarms can be annoying, they're often a necessary byproduct of staying ahead of increasingly aggressive and sophisticated fraud attempts. As per data 60% of credit cardholders experienced attempted fraud in 2023, it's clear this is a growing problem that banks and card companies must take very seriously.

Now-a-days instant fraud alerts are sent by text or phone, has become common, but there are still many instances where verifying purchases can take longer and involve more tedious processes. This is especially true in case of high-value or unexpected transactions. Stay alert, keep an eye on your account activity, and promptly responding to fraud alerts that can be the best defenses for cardholders, even if the system isn't perfect. And this is going to be the biggest issue in coming years.

In recent years data breaches and fraud methods have evolved, making it very crucial to protect not just credit card information, but also other sensitive financials and personal data like social security numbers/social insurance number and other identity background information. The recent breaches at companies like Ticketmaster, Change Healthcare, AT&T, Desjardins Group, IKEA and National Public Data illustrate us the growing threat and cyber landscape is changing due to AI. However, technological advancements, particularly in AI-driven fraud detection, offer a silver lining.

AI is also playing a key role in reducing credit card fraud, as seen recently, 5.4% decrease in reported cases from 2023 to 2024. Mastercard, for example, has reported a 20% increase in fraud detection capability, with help of AI, with fewer false alerts. Acquisitions like Mastercard's purchase of Recorded Future are part of ongoing efforts to enhance security and protect consumers from compromised accounts.

But the process of dealing with potential fraud is also becoming more seamless. Instead of manually alerting credit card companies before travel, with the help of machine learning, patterns from past behavior now help companies to detect legitimate foreign transactions. Additionally, verification of flagged fraud can often be resolved quickly through digital means, reducing the hassle of calling customer service.

While breaches are still occurring, it's clear that technological advancements are offering stronger protections and improving the overall fraud detection process. But cyber criminal are also using the same AI to create loopholes and create frauds. So stay alert data breaches will keep on rising as we go deeper inside AI world.

We are sharing with you some tips to cut down on unnecessary alerts while maintaining security:

Try to use a consistent shopping patterns: Like if you are buying from a new stores or making some big-ticket purchases, then must expect alerts. So try to keep your transactions within your usual spending habits or notify your card provider in advance for an unusual spending.

Try to avoid m to avoid multiple rapid transactions: Always avoid making multiple purchases in quick succession, as this can often trigger alerts.

Always set transaction limits: Try to set personalized monetary limits on your accounts so that you only receive alerts when transactions are above a certain limit threshold.

Always enable two-factor authentication (2FA): Try to use 2FA with a biometric passcode to add extra security without unnecessary alerts.

Always monitor your credit alerts: Try to use credit monitoring services to track any major changes in your credit file, this can reduce random alerts from your purchases.

Try to use low-limit credit cards for online shopping: I know its difficult but try to use a low-limit credit card for online transactions to reduce exposure to fraudulent charges and any potential alerts.

Always shop from trusted websites: Try to stick to reputable sites, use tap-to-pay or mobile payment apps, and always avoid public Wi-Fi to minimize the chances of triggering fraud detection.

Try not to ignore alerts: Always keep attention to oncoming alerts, even if they seem too frequent. It might help you spot fraud early.