On 3rd June, Worldpay from FIS announced a new service, Fraud Freedom, designed for crypto brokers and exchanges. The new service is a welcome relief for brokers and exchanges, who will receive indemnification.
FIS is a global financial services provider and the power behind Worldpay’s Fraud Freedom. The global leader identified the need for secure and smooth user experiences for crypto users. Thus, the financial powerhouse designed the chargeback service to help minimize fraudulent transactions in the crypto space.
More Crypto Transactions, More Fraud Opportunities
According to CoinGecko’s yearly report, 2019 registered a 600% increase in crypto trading volume. Following the COVID-19 pandemic, the number of transactions in the cryptocurrency market has soared. Jesse Powel, the CEO, and Founder of Kraken, explained that the traditional system was breaking down, paving the way for blockchain transactions. The thriving blockchain industry would mean more hires, and therefore, more people would be interested in the technology.
Unfortunately, the spike in the cryptocurrency transactions also means a spike in fraud opportunities. In fact, a recent report shows that criminals and hackers netted $1.36 billion in the first five months of 2020 alone. These numbers are worrying, and hence the need for a cushioning effect for exchanges and crypto brokers.
Details of the Fraud Freedom Service
The new program runs on artificial intelligence and will help exchanges and brokers to pinpoint any malicious activity on the network. Fraud Freedom Service monitors customers throughout the entire system to ensure they don’t make any fraudulent purchases or trades.
Speaking on the new service, Shane Happach commented that the combination of AI and Forter’s robust network would help crypto clients maintain high-security standards and shift to the mainstream network.
Fraud Freedom Service uses AI to learn and obtain real-time data from Forter’s market. It then uses the information to update the fraud models, which helps organizations to reduce fraudulent chargebacks. Additionally, that automated process reduces the need for manual reviews, thus saving costs for its clients.
Does the Crypto Space Breed Fraudulent Activities?
The cryptocurrency world has been a popular target for fraudulent criminals because of its decentralized nature and the anonymity it provides. Fraudsters use several tricks such as fake ICOs, pyramid Ponzi schemes, fraudulent wallets, and even classic phishing to lure in unsuspecting crypto users.
Just this year, there have been several fraudulent scams that have contributed to the $1.36 billion crypto crime net. The biggest culprit is the Wotoken Ponzi scheme that defrauded over $1 billion worth of crypto. Another huge contender is FCoin, a Chinese crypto exchange that lost $130 million, and EOS Ecosystem, a digital wallet that exited the market with investors’ $52 million.
Although KYC Checks are proving to be quite efficient in curbing these cases, services like Fraud Freedom Service may be the clutching straw for exchanges and brokers globally.
