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Expert sources: 2025 rising risks in payments

  • The use of generative AI (GenAI) to perpetrate widespread fraud. G2RS analysts report that GenAI is being used to create sophisticated websites that are harder to identify as fraudulent. In addition, criminals are using GenAI to mass-produce synthetic consumer identities, which they use to apply for illicit merchant accounts—at scale.Further, G2RS analysts have observed a proliferation of websites offering deepfake adult content creation services. These services violate card network rules and, in some cases, the law.
  • Tainted nutraceuticals. Tainted products, often containing undeclared pharmaceuticals or banned substances, pose significant risks to consumers—and payment providers. Sexual enhancement, weight loss, and bodybuilding supplements remain the categories most frequently found to contain undeclared ingredients; however, new categories are beginning to emerge. Regulators have recently issued alerts regarding supplements tainted with toxic yellow oleander, liquid kratom supplements associated with consumer harm, and supplements that contain undeclared corticosteroids. Payment providers need to take quick action in response to these alerts—or risk card brand assessments.
  • The evolution of “subscription-based fraud.” In 2024, G2RS saw a significant uptick in illicit merchants enrolling consumers in unauthorized subscriptions using stolen credit cards. The recurring monthly fees are often low-dollar, making them less likely to be noticed by consumers and allowing bad actors to continue siphoning funds undetected. Additionally, in 2024, the Federal Trade Commission (FTC) announced its “Click to Cancel” rule to address deceptive practices in subscription services. The rule, which will go into effect in 2025, is expected to increase card network focus on merchants offering subscription services.
  • Fake reviews as an industry. Fake reviews, testimonials, and likes/follows have become a serious problem in e-commerce, fueled by the growth of merchants that sell these services. In 2024, both the US and the UK passed regulations banning the sale of fake reviews, allowing regulators to seek penalties against known violators. Yet, illegal sales continue to proliferate online. Card brand networks have begun assessing fines, and payments providers and online marketplaces face increasing pressure to monitor and prevent fraudulent review activity within their portfolios.
  • Transaction laundering-as-a-service. Recently, there has been an increase in criminals outsourcing transaction laundering to third parties. These operations automate and scale the laundering process, leveraging large numbers of shell companies, straw signers, and thousands of sophisticated “front” websites to disguise illegal transactions. Payment providers must implement stronger merchant vetting and monitoring to keep these illicit merchants out of the payments ecosystem and avoid card brand assessments.

G2 Risk Solutions (G2RS)

G2 Risk Solutions is the definitive expert in risk and compliance business intelligence for financial institutions and online platforms. We are industry pioneers providing market-leading solutions for merchant risk, digital commerce risk, bankruptcy risk, and credit risk and regulatory reporting. We are driving innovation and shaping the future of risk management through unprecedented data, technology, and global compliance and risk expertise, providing the financial services and digital commerce ecosystems with the tools needed to navigate complex and ever-changing regulatory requirements and mitigate risk ...

To learn more, visit g2risksolutions.com.

 

Contact

Nicole Selinger
nicole@kmprcollective.com
314-805-2165

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