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CoverStory

The most common reasons given for using BNPL, Adobe identities on a massive scale. Synthetic ID fraud (where
said, include freeing up cash and the ability to purchase genuine information is merged with fabricated informa-
something they otherwise could not afford. tion to create new synthetic identities used to open ac-
counts and make fraudulent purchases) has become a
AI: the good, the bad and the ugly revenue-draining threat for merchants and acquirers, ACI
Generative artificial intelligence-powered chatbots have said in a report.
had a dramatic impact on traffic to retail ecommerce sites
this year. And use of generative AI tools for shopping is The average value for this type of attack is nine times
expected to rise this holiday season. "This is the first holi- more than other common types of payments fraud, ACI
day season retailers have been able to employ generative said, adding that merchants and their acquirers can coun-
AI to serve customers in effective ways," noted the NRF's ter this trend by tightening their fraud strategies through
Shay. the use of AI-based fraud tools to help spot fakes.

Generative AI is a form of AI that can understand plain But in a webinar, ACI fraud experts counseled that AI tools
language prompts or questions and respond with text or alone will not be enough. "AI is dependent on the data that
images. It is said to help retailers better understand cus- is put into [the models] to generate the best responses,"
tomers based on order histories so they can serve up help- Mickleburgh said. "Human intelligence is as important as
ful suggestions. artificial intelligence." She characterized AI as a "time sav-
er" for reviewing vast reams of data. "AI models need to
Adobe's survey found that seven in 10 consumers who be built and augmented by humans." Using data "smartly"
have used generative AI for shopping believe it enhances results in less friction for consumers, she added.
their experience, and two in five plan to use it for the holi-
days. Additionally, 20 percent of those surveyed said they Patti Murphy, self-described payments maven of the fourth estate, is
use AI to find the best deals and specific items online. But senior editor at the Green Sheet. She also co-hosts the Merchant Sales
there is a downside to AI. AI-driven bots and scripts have Podcast, and is president of ProScribes Ink.
become tools that allow fraudsters to generate synthetic

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