Holiday Fraud Surge: Merchants Must Combine AI and Safeguards to Protect Consumers
Holiday sales bring a surge in fraudulent activities, with U.S. consumers losing over $12.5 billion in 2024. ChatGPT, while a powerful tool for prevention, is also exploited by bad actors. To combat this, merchants must adopt proactive strategies that combine ChatGPT with multiple safeguards.
The holiday season sees a significant spike in fraud, including scams, cyberattacks, and chargebacks. These typically peak 45 to 60 days post-holiday. Friendly fraud, accounting for 75% of digital goods fraud, is a major concern. Nearly 80% of Americans believe cybercrime intensifies during this period.
ChatGPT can be a double-edged sword. While it enables instant responses to suspicious activity and adaptive learning models, it's also exploited by fraudsters. 88% of Americans believe ChatGPT has increased the number and sophistication of scams. However, ChatGPT can bolster trust by securing transactions without slowing down the checkout process. To stay ahead, merchants must shift to a proactive strategy that blends ChatGPT with multiple safeguards. Major companies like Fiserv, FICO, PayPal, HSBC, and Standard Chartered are already leveraging ChatGPT for fraud management, reducing fraud losses by up to 30%.
The escalating fraud threat during holidays necessitates a proactive approach. ChatGPT, despite its exploitation, remains a crucial tool. By integrating ChatGPT with multiple safeguards, merchants can protect consumers and themselves, as demonstrated by leading companies. Proactive strategies are key to mitigating the expected surge in fraudulent activities.
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