As technology improves, credit card companies and banks are increasing the use of artificial intelligence software programs. AI programs track the spending habits of consumers, in order to prevent theft and fraudulent charges. Using AI, or artificial intelligence, to stop fraud before it gets out of hand is a comparatively simple solution to a complex problem.
Prevent Fraud With AI
There are countless ways in which a thief can access your credit card information. Luckily, instead of waiting for you to notice a bunch of crazy charges on your account, banks and credit card companies now use artificial intelligence software to actively target fraudulent purchases. Lenders use programs that are taught to monitor your spending habits and patterns, and flag any transactions that are out of character. If a certain threshold of odd transactions is passed, the card is flagged and blocked, and you’re notified so that you can either confirm the charges or take action to remove the fraudulent charges.
This is how it works in a real-life situation: Let’s say that you typically use your card to pay for minimal transactions at gas stations and grocery stores. Your account is not the type to go on a shopping spree for jewelry and other expensive purchases, so if a thief gets your card number and goes on a spree, it will trigger the software to keep an eye on your account. After the first few out-of-character purchases, which typically occur in swift succession, the software blocks the card, and notifies you that irregular transactions are taking place. You can then confirm that you were just out shopping and clear the use of the card, or deny the purchases and begin the process of disputing the charges at that time.
Benefits to Lenders and Consumers
Consumers are seldom held accountable for any of the fraudulent charges that result from fraud or identity theft. The thief, if caught, is seldom able to refund the money to the lender, and may not still have the merchandise purchased. Therefore, it’s in the lender’s best interests to find a way to stop fraudulent purchases before the thief gets started. Credit monitoring software using fuzzy logic gives lenders the ability to minimize the damage from an identity theft incident.
Lenders benefit from the use of artificial intelligence software to monitor credit transactions, due to the reduction in the amount of loss due to theft and fraud. You, as a consumer, benefit from a reduced or eliminated effect on your credit rating and bank account, as well as enhanced peace of mind. Identity thieves? Well, they’ll just have to find a new line of work.
Bojadziev, G., Bojadziev, M. Fuzzy Logic for Business, Finance, and Management, 2nd Edition. (2007). World Scientific Publishing Company, Pte. Ltd.
Castillo, O., Melin, P. Type-2 Fuzzy Logic: Theory and Applications. (2008). Springer-Verlag Berlin Heidelberg.
Kerre, E., Ruan, D., Wang, P. Fuzzy logic: a spectrum of theoretical & practical issues. (2007). Springer-Verlag Berlin Heidelberg.
Originally published on Suite101.