Fighting payment fraud with new tools and reporting requirements

Recent improvements in digital payment technology have given consumers unprecedented flexibility. Tasks ranging from reimbursing a friend for dinner to donating to a victim of a faraway natural disaster can be completed at the push of a button. But as payment options have expanded, so has digital payment fraud. According to the Federal Trade Commission (FTC), Americans reported $8.8B in fraud losses in 2022—a 30% increase compared to 2021—mostly to imposter scams.¹ Furthermore, fraud has become the most common crime in the UK, where an average of £2,300 was lost to fraud every minute in 2022 and where more money is now being lost in authorized push payment scams than to card fraud.²

As the digital economy has grown, the number of scammers has increased. They can now reach their targets through social media as well as through phone and email. Online payment marketplaces and apps also present new opportunities for fraudsters to manipulate their victims. Fraud attempts may involve convincingly duplicated phone numbers or e-mail addresses that victims will recognize and trust or websites that claim to be selling sought-after products at unbelievable prices and demanding immediate bank transfers as payment. In the U.S., the amount of money lost to fraud rose steeply in 2022 although the number of reported frauds decreased slightly, indicating the effectiveness of these fraudulent techniques.¹

With the evolution of digital payments and the corresponding increase in the risk of fraud, financial institutions and regulated entities are expected to ensure that adequate controls are in place to combat financial crime. Visa Direct helps its financial partners stay one step ahead of fraudsters using two new innovative security tools, namely Account Name Inquiry (ANI) and fraud reporting systems.

ANI helps close the door to fraudsters

ANI is a new capability of Visa’s existing Account Verification service.³ ANI is a name-matching service that helps Visa partners protect against scams and fraud in both push and pull payments. By alerting online merchants and other Visa Direct originators when the name provided by a cardholder doesn’t match the name on record at their issuing bank, ANI can help prevent various types of fraud, including app scams, impersonation scams and account takeovers.

Visa’s ANI service enables acquirers to collaborate with issuers to cross-check and verify a customer’s name by providing a matching result, which can alert parties to a potential mismatch. The information provided by the ANI verification can help merchants decide whether it is safe to proceed with any given transaction or payment. Issuers in Canada, U.K. and U.S. are mandated to support this service as of October 2023.

To learn more about ANI, download our tear sheet.

Enhanced fraud reporting gives acquirers a tool to report fraud

Visa Direct‘s new reporting requirements can help reduce the likelihood of repeat fraud. As of October 2023, acquirers are required to report fraud for original credit transactions (OCTs), and issuers will be required to use new data fields when reporting fraud to provide detailed information on the types of fraud that are being committed. These enhancements to Visa’s previous fraud reporting capabilities will help improve information sharing between Visa and its acquirer and issuing partners. Prior to the introduction of the new functionality, fraud alerts were typically filed using paper reports. This filing was a time-consuming and resource-heavy process that often led to delays and gaps in communication that made it possible for fraudsters to continue perpetrating crimes even after they’d been identified as a threat.

With Visa’s fraud reporting, for the first time, acquirers have their own mechanism for reporting push payment fraud. Using Visa’s system, reports from acquirers are quickly routed to issuers, allowing issuers to process and act on fraud reports in a timely manner to prevent further fraudulent activities from the same source. This reporting feature can be used in conjunction with existing fraud monitoring and prevention systems to enhance proactive fraud management.

These new reporting requirements for card-based push payments are intended to improve information sharing across the digital payments ecosystem not only by sharing more information more quickly but also by providing data on specific types of fraud that are occurring. Visa Direct’s fraud reporting tool provides information on the rate of occurrence of seven types of fraud, including purchase, investment scams and impersonation scams on account funding transactions (AFTs) and OCTs. This information can help improve Visa’s modeling and provide insights into how fraudsters perpetrate scams, which in turn can help with the development of future tools.

This new reporting system also demonstrates Visa Direct’s proactive approach to preventative fraud and risk management. By continually improving the technology that underpins fraud reporting and tracking systems, Visa is responding to the needs of a quickly evolving market while building capabilities to recognize scammers and prevent them from committing fraud.

With Visa Direct, security moves as quickly as money moves

Visa Direct is deeply invested in developing new tools and features to help mitigate money movement fraud and minimize exposure to financial fraud and losses across our ecosystem. Visa Direct’s new ANI and fraud reporting systems show our commitment to helping our clients and partners stay a step ahead of fraud.

DISCLAIMER

Visa Direct clients and participants should always consult and seek approval from their internal compliance teams on fraud controls and processes. Visa Direct clients and participants are solely responsible for their own compliance with applicable laws and regulations.

1. Federal Trade Commission, February 23, 2023, New FTC Data Show Consumers Reported Losing Nearly $8.8 Billion to Scams in 2022.
   https://www.ftc.gov/news-events/news/press-releases/2023/02/new-ftc-data-show-consumers-reported-losing-nearly-88-billion-scams-2022
2. BBC, May 11, 2023, Warning: UK losing £2300 per minute to fraud.
   https://www.bbc.com/news/business-65545247, UK Finance, "Annual Fraud Report: The definitive overview of payment industry fraud in 2022," https://www.ukfinance.org.uk, October 2023.
3. Visa’s Account Verification service is a zero-amount authorization message that allows a merchant to verify card accounts and provide fundamental checks before the card account is accepted for payment. It is available through either ISO or API.