Ballerine, a US-based AI-native merchant risk and compliance platform, has introduced Scam and Fraud API Detection. This innovative solution aims to identify high-risk merchants and coordinated fraud networks prior to any transactions taking place.

Within 60 seconds, the system evaluates digital footprints, behavioral signals, ownership structures, and ecosystem connections to make a risk assessment, moving beyond traditional methods that rely solely on transaction monitoring or static onboarding checks.

Designed to detect patterns across networks of merchants rather than analyzing individual entities separately, this solution identifies clusters of related businesses, inconsistencies between declared and actual business activities, early indicators of transaction laundering, and concealed high-risk operations within ostensibly legitimate storefronts. It addresses the challenge posed by coordinated fraud groups that operate across various identities, geographies, and payment providers.

Navigating the Evolving Fraud Landscape

Ballerine’s launch comes in response to a documented escalation in both the scale and sophistication of merchant fraud. Scam operations that once took months to establish can now be rapidly set up using AI tools, camouflaging as legitimate businesses while concealing coordinated high-risk activities.

Research by Ballerine, based on an analysis of millions of merchants, reveals repeatable scam models such as synthetic merchant identities, deceptive storefront networks, fraudulent subscription structures, and transaction laundering mechanisms that function as scalable, adaptive systems rather than standalone events. This research is detailed in a new book authored by CEO Noam Izhaki.

The company highlights the growing gap between current fraud practices, which are automated, coordinated, and AI-driven, and the detection methods employed by financial institutions, many of which still depend on fragmented signals and delayed review processes. As commerce increasingly shifts towards agentic transactions, the ability to instantly validate merchant legitimacy becomes paramount in fostering trust within automated payment systems.

Noam Izhaki, Co-founder and CEO of Ballerine, asserts that their solution can determine a merchant’s malicious intent in under 60 seconds and prevent fraudulent transactions before they occur. This addresses a critical gap in risk assessment systems built for slower, more manual environments.

Cihat Fitzgerald, Chief Risk Officer at Ballerine and former Head of Ecosystem Risk at Visa, underscores that coordinated fraud mechanisms are designed to move across different acquirers and geographies, exerting pressure throughout the entire payments ecosystem.