SOFIAH NICHOLE SALIVIO

News Editor

Ecommpay has published the second part of its fraud report on financial services and payments, arguing that fraud prevention requires broader cooperation across the payments sector.

The report, titled Beyond the Black Box – From diagnosis to action: transforming fraud prevention for a human-first world, outlines steps government, regulators, businesses and other stakeholders can take to reduce fraud. It follows an earlier instalment that examined the current fraud landscape and the growing role of human psychology in scams and payment crime.

The latest findings suggest a shift in where fraud prevention is breaking down. Rather than outdated technology being the main weakness, criminals are exploiting a combination of human behaviour, limited resources and regulatory complexity.

That assessment reflects a wider debate in payments over whether extra checks and customer friction can still counter changing fraud methods. Ecommpay argues that the current model is too fragmented to respond effectively to a crime that crosses borders and affects both businesses and consumers.

“The first part of our Fraud Report demonstrated how and why the current approach to fraud prevention is failing businesses and customers,” said Willem Wellinghoff, chief compliance officer and UK chair at Ecommpay.

“Over the years, new tools and layers of friction have been added to onboarding and payment processes to tackle the shifting threat of fraud. However, this approach is no longer serving its purpose – more friction is not the answer. What we need is a fundamental shift in how the industry thinks, works and collaborates.”

Pressure points

The report emphasises the limits of traditional fraud controls. It argues that the tools and frameworks used by many firms are no longer sufficient on their own to address newer forms of fraud, especially when criminals rely on social engineering and manipulation rather than direct technical intrusion.

In that context, transaction monitoring, artificial intelligence and regulation still have a role, but only as part of a more joined-up system. Businesses, regulators and government need to align their approaches more closely if they want to reduce losses and intervene earlier.

Wellinghoff expanded on that point in a further comment on the report’s conclusions.

“Traditional fraud prevention tools and frameworks are not equipped to provide comprehensive protection against modern fraud techniques. Robust transaction monitoring, correctly employed AI and balanced regulation are all valuable elements in successful fraud prevention. But businesses, regulators and government must work collaboratively to consolidate approaches and reduce fraud. We must shift from a reactive approach of reimbursing victims after the fact to proactive fraud prevention at source.”

Merchant steps

Alongside its broader recommendations for policymakers and the industry, the report includes practical actions for eCommerce merchants. These are intended to help businesses review their own defences while addressing the customer side of fraud risk.

The measures include discussing fraud prevention with payment providers, auditing internal systems, educating customers about fraud risks and training staff to identify suspicious activity. Ecommpay also calls on merchants to keep up with changes in the fraud landscape, watch for unauthorised use of their brand and report suspected fraudulent transactions to payment service providers.

This suggests the company sees fraud prevention as a shared operational task rather than a function that can be outsourced entirely to a single payments partner or software tool. It also points to growing concern across online commerce that attacks increasingly target trust, routine behaviour and weak links between businesses and consumers.

Broader debate

The publication adds to industry discussion about how to balance consumer protection with smooth payment journeys. Payments companies and merchants have long faced pressure to tighten controls, but they also risk creating barriers that deter legitimate customers if checks become too intrusive.

Ecommpay argues that this trade-off has become harder to manage because fraudsters are adapting faster than many existing control systems. In particular, the report suggests the sector must move beyond simply adding extra layers to account opening and payment flows if it wants to respond to more complex, psychologically driven fraud attempts.

Founded in London in 2012, the company operates in global and local acquiring, payment processing and orchestration. Its latest report centres on the view that fraud can no longer be treated as an isolated compliance issue for individual firms, but as a systemic problem requiring coordination across the market.

The report’s central recommendation is that the sector should focus less on reimbursement after losses occur and more on stopping fraud before money leaves the system.

Searchable found that 93% of London businesses in its study were described inaccurately by major large language models. The research focused on small and medium-sized enterprises and compared their results with those of larger companies.

It tested ChatGPT, Perplexity and Gemini more than 13,000 times on 165 London businesses, asking about services, contact details, staffing and other identifying facts. The responses were then checked against official LinkedIn profiles and Companies House records to determine whether the information was correct, incomplete or missing.

The results suggested a sharper problem for smaller firms. Half of SMEs received at least one false fact from an LLM, compared with 32% of large companies, a 56% higher rate of fabricated information for SMEs.

Across all prompts, 11 in 100 questions about SMEs returned false or missing information on key brand facts, compared with 7 in 100 for large companies. The study also found that LLMs were twice as likely to fabricate information about an SME, with a 5% fabrication rate versus 2% for larger brands.

Brand confusion was another issue. The findings showed that LLMs misattributed or confused SME brand names at a rate of 4%, compared with 0.7% for large companies, suggesting smaller businesses are more vulnerable when users rely on AI tools for basic discovery queries.

Discovery gaps

The weakest areas for accuracy were company size, website, founding year, phone number and services. These are among the details prospective customers often seek when deciding whether to contact a business.

Inaccurate responses included verifiably false facts, incomplete listings that covered at least 30% fewer essential services, or answers that failed to retrieve any verifiable existing information about a company.

The analysis adds to a wider debate about the reliability of consumer-facing AI tools as they become part of online search and recommendation behaviour. For smaller businesses, errors in basic facts could affect discovery when users are looking for a supplier, a contact number or confirmation that a company offers a specific service.

Chris Donnelly, co-founder of Searchable, linked the problem to the way language models are trained on public web data. He said smaller companies may be less visible to such systems because they are mentioned less often online than larger brands.

“Right now, if someone asks ChatGPT about a local company, there’s a very real chance the AI either makes something up or draws a blank on key information. That’s the equivalent of customers and revenue walking straight past businesses they should be connecting with.

The issue is related to how LLMs work. They’re trained on publicly available web data, which often skews toward larger, more widely referenced brands. A London SME with a smaller digital footprint is less likely to register among what AI is reading and citing to its users,” Donnelly said.

His comments reflect concern that AI systems may reproduce an existing imbalance in online visibility. Large businesses typically have broader media coverage, more backlinks, more directory listings and stronger digital footprints, all of which can make them easier for models and search systems to identify consistently.

At the same time, the findings suggest the gap is not fixed. Searchable argued that AI-driven discovery does not necessarily entrench incumbent brands in the same way as traditional search rankings, creating room for smaller companies to improve how they are represented.

“At the same time, AI doesn’t cement big brands as favourites in the way that traditional search engines do. The playing field can be levelled more quickly for a well-optimised SME that understands how to make itself visible to these systems,” Donnelly said.

How it was tested

The study covered 165 London businesses and generated 13,365 AI responses. Questions covered location, business size, services, specialties, website, founding year, phone number and other identifying facts.

A response was classed as inaccurate if it contained false information, omitted a significant share of essential services or failed to return verifiable information that existed in public records. That means the research measured not only outright hallucinations but also cases where AI systems appeared unable to surface established facts about a business.

The results indicate that while AI assistants are becoming a common route for gathering information, their performance on local business discovery remains inconsistent. For SMEs that depend on accurate digital visibility, the data suggests a missing phone number, a wrong service description or a mistaken identity can still appear when a potential customer asks an AI a simple question.

SOFIAH NICHOLE SALIVIO

News Editor

UK credit card balances returned to a record high in April, according to FICO’s latest market report, which also showed higher spending and lower repayments.

Average active balances rose 1.3% from the previous month to £1,950, matching the peak last seen in December 2025. Spending increased 10% month on month to an average of £815, which FICO linked to typical Easter behaviour.

The data also pointed to mounting pressure on household finances. The proportion of overall balances repaid fell 1.4% month on month to 32.6%, a third straight monthly decline that brought it closer to the pre-pandemic average of 30%.

Missed payments worsened across several categories. The percentage of customers missing two payments rose 1.9% from March and 16.3% from a year earlier, while the share missing three payments increased 6.2% month on month and 17.3% year on year.

The three-missed-payment category was the weakest in annual terms across the delinquency measures covered in the report. Balances on accounts with missed payments were higher across all delinquency categories than in the same month last year.

Accounts with one missed payment showed a small monthly improvement after a spike in March, but remained 4.9% higher than a year earlier. Customers missing a payment for the first time were also carrying larger debts, with the average balance on those accounts up 6.7% year on year to £2,480.

Average balances also rose for more serious arrears. Accounts with two missed payments carried an average balance of £2,855, up 0.5% on the year, while those with three missed payments reached £3,325, up 3.4%.

Affordability strain

Another sign of pressure came from overlimit borrowing. The number of accounts exceeding their credit limit rose 14.1% month on month and 4.6% year on year.

Average overlimit spending stood at £95. That was down 5.9% from March, but still 5.5% above the level recorded a year earlier.

The April figures suggest consumers were adding to debt even as payment behaviour weakened. That contrasts with improvements seen during 2025 in the share of customers missing payments.

Banks and card issuers are likely to watch the findings closely as they assess signs of financial stress among borrowers. While spending increased in April, the monthly growth was not enough to move above 2025 levels, suggesting the uplift may have been seasonal rather than a sign of stronger finances.

The report draws on data shared with subscribers to FICO’s Benchmark Reporting Service. The sample comes from client reports generated by the company’s TRIAD Customer Manager system, which is used by about 80% of UK card issuers, according to FICO.

In its assessment, FICO pointed to a combination of persistent inflation and volatility in global energy prices as factors weighing on household budgets. It said the rise in spending, combined with weaker repayment rates, had pushed more customers into arrears and above their credit limits.

That leaves lenders facing a more difficult consumer credit picture after a period in which some indicators had improved. April’s rise in balances and deterioration in later-stage missed payments suggest pressure is becoming more entrenched among some cardholders, especially those already carrying larger debts.

FICO said: “April 2026 presents a mixed but broadly concerning picture for lenders. With consumer spending rising, but repayments falling, more customers have fallen into arrears and gone over their credit limit. The monthly growth in spending does not go far enough to rise above 2025 levels, suggesting that any improvements are likely to be seasonal rather than a sign of stronger financial health. And with average balances now matching the record high from December 2025, it is clear that consumers are carrying more debt in 2026.”