PayPal Unveils AI-Powered Scam Detection System for Real-Time Fraud Prevention

PayPal introduces AI-powered scam alerts

This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author. Designed to proactively alert customers to potential scams and prevent losses in real-time, the alerts intervene when it matters most - before any funds are sent.  As scammers attempt to coerce people into sending payments that may not be eligible for refunds, including scams that originate on social media, we believe putting more information directly into customers' hands will empower them to help stop scams in their tracks. As trusted leaders in efforts to prevent fraud, PayPal is proud of our initiative to combat the ever-changing tactics of scammers. We do not tolerate scams and work hard to protect our customers, including shutting down fraudulent accounts and blocking suspicious activity. Our approach to addressing fraud is multi-pronged, comprised of building innovative technologies, leveraging investigative research led by our team of experts, and refining our risk controls to help prevent bad actors from accessing our platforms. Given fraudsters frequently change their methods to try to evade detection, staying ahead of the latest trends and continually enhancing our tools are critical aspects of our efforts. When building PayPal's dynamic alert system, we focused on both effective fraud mitigation strategies as well as enhancing the user experience. The alerts pop up when the system detects a potential scam, sharing critical and relevant information about the likelihood of fraud right at the point of payment. To help stay ahead of the curve, the alerts learn and adapt to evolving scam tactics. PayPal's system leverages continually learning AI models that quickly analyze billions of data points and update when patterns change. This means our system can help more quickly detect a potential new scam, even if we have never seen that specific scam before. Unlike traditional, one-size-fits-all static warnings, PayPal's alerts are dynamic and tailored to be shown based on the likelihood of fraud for each transaction. The system shares messages that appropriately reflect the risk level of the payment customers are trying to make. It also sends progressively stricter alerts as its confidence that a scam exists grows and adds more friction into completing payments for higher-risk scenarios. We continue to automatically decline payments that we detect as highly risky. The alerts are live in all global markets in which PayPal operates, and across the U.S. on Venmo. For any questions, our PayPal and Venmo Customer Support teams are always available to help. Learn more about PayPal's fraud prevention efforts and our educational tips to spot and avoid scams on the  PayPal Security Center.

PayPal Adds Scam Detection to Friends and Family Payments | PYMNTS.com

"Designed to proactively alert customers to potential scams and prevent losses in real-time, the alerts intervene when it matters most -- before any funds are sent," the company said in a Monday (July 21) news release. "As scammers attempt to coerce people into sending payments that may not be eligible for refunds, including scams that originate on social media, we believe putting more information directly into customers' hands will empower them to help stop scams in their tracks." According to the release, the system was designed to provide fraud mitigation and an improved user experience. The alerts appear when the system detects a possible scam, sharing information about the likelihood of fraud at the point of payments. The alerts can learn and adapt to scam tactics as they evolve, employing artificial intelligence (AI) models that analyze billions of data points and update when patterns change. "This means our system can help more quickly detect a potential new scam, even if we have never seen that specific scam before," PayPal said. Research by PYMNTS Intelligence has shown the widespread nature of financial scams. Roughly 30% of Americans -- around 77 million people -- have lost money to a scam in the last five years, according to the report "How Scammers Tailor Financial Scams to Individual Consumer Vulnerabilities," created in collaboration with Featurespace. "This highlights the pervasiveness of these crimes, with most victims losing more than $500, and many experiencing even more significant financial losses," PYMNTS wrote. "The report also shows how scams affect individuals across various demographics, including age, education and income. While scams like job search fraud tend to target younger consumers, older generations are more vulnerable to eCommerce scams." For example, baby boomers and seniors were three times more likely to be taken in by phony online shopping schemes than Gen Z. These variations in scam susceptibility show how scammers alter their approaches to different groups based on their needs and situations. A major factor in the increase of scams is the way scammers personalize their approach according to the victim's lifestyle and characteristics. This personalization makes scams seem more legitimate and tougher to spot. "Consider 21% of Gen Z consumers reported falling for scams initiated through social media platforms, reflecting their heavy digital presence," PYMNTS wrote. "Older generations like boomers are more frequently contacted via email or phone calls, methods they trust more. Scammers often adapt to these preferences, using channels that are most likely to engage specific age groups."