Yahoo Finance AI is making financial scams harder to detect
Long gone are the days when your grandmother received a poorly-written email from a Nigerian prince promising a windfall. These days, courtesy of AI, financial scams are a lot more sophisticated — and believable.
Using artificial intelligence, scammers are employing deeply persuasive FaceTime calls, phone calls, and emails to unsuspecting victims. They are posing as prospective lovers, close friends, or even government agents from the IRS, according to experts.
Consequently, experts warn the problem could reach unprecedented levels as fraud becomes almost undetectable. They caution Americans to keep their guards up so they don’t get swindled, and recommend several ways to protect themselves.
“We call it crime 3.0,” said Haywood Talcove, CEO of the government group at LexisNexis Risk Solutions, a data analytics company that protects against identity fraud among other services. “The use of this technology — whether it's artificial intelligence, generative AI, as well as the deep-fake technology — has the ability to blow through most of the tools that have been set up to protect our financial institutions and our government institutions.”
‘AI is a problem for everyone’
Recently, online scams have shot up. Federal Trade Commission data released in February showed that consumers lost roughly $8.8 billion due to fraud in 2022. That’s a 19% increase over the previous year.
Kathy Stokes, AARP’s director of fraud prevention, or Fraud Watch Network, pointed out that such numbers don’t reflect the true scale of the problem because most online scams go unreported.
“We don't know how big it is,” Stokes said. “But we know it's so much bigger than we can even imagine.”
She also noted that fraud doesn’t solely affect older Americans. Indeed, the recent FTC data indicate that young people now fall victim to fraud more frequently than seniors.
“AI is a problem for everyone, not just older adults, and versions of artificial intelligence have been part of fraud for a long time,” Stokes said. “But now this generative AI just really creates so much more sophistication to the way they target people.”
She added: “It's just when that older adult is the target, they tend to lose so much more because they have those assets that they've saved for retirement — an insurance policy if they're widowed and housing wealth and the criminals will go after that.”
‘You don't look like a 25-year-old fraudster’
According to the experts, criminals engage AI in several kinds of scams to better dupe their victims.
For instance, with ChatGPT, criminals can now send more persuasive letters requesting money, Adam Brewer, a tax lawyer, told Yahoo Finance.
“The difference now is that it's just more polished. Essentially, they have the computers writing the scripts or writing the letters,” Brewer said. “It's just going to be a lot harder for the average person to detect.”
Talcove cited the romance scam, in which fraudsters pose as prospective lovers and fool victims out of their money. Fraudsters can use deepfake technology to alter their image and even the sound of their voice. Lonely, elderly men are particularly susceptible to this form of fraud.
“You don't look like a 25-year-old fraudster. You look like a 40-year-old attractive female and everything fits the image, fits in the voice,” Talcove said. “That to me is when you're looking at one of the more devastating impacts of artificial intelligence.”
He also spotlighted ransom fraud. In this particular scam, Americans might receive a call from a family member or close friend in the middle of the night urgently pleading for money.
“You're lying in bed at night. Your phone calls and it sounds like your kid, and they're stuck in the Bahamas and they've been arrested. And you need to send them $5,000 immediately,” Talcove said. “They use generative AI for replication and voice and it's really not your kid.”
‘If you've heard about it’
Experts recommend several courses of action for addressing this kind of fraud.
One way to avoid ransom fraud is by creating a family password that a fraudster wouldn’t know, Talcove said. To deter romance fraud, adult children should advise their parents to not send money to strangers.
Meanwhile, Stokes said potential victims should watch out for messages that put them in a “heightened emotional state,” such as winning lots of money or the beginning of an exciting, new romantic relationship.
“Those things put us into a place in our brain, the amygdala, where it's hard to come out of it to access logical thinking. Criminals have known that since forever,” Stokes said. “And unfortunately, the tools have become so much better for them, that they're able to cause so much harm, but we really need people to focus on that. “
She added: “That red flag — it's that emotional reaction to an incoming communication. That's the flag. That's where to disengage.”
To verify someone's identity on social media, Stokes recommended folks conduct a reverse image search.
“And if that person shows up on other people's names, then you know the person is trying to defraud you and deceive you in some way,” she said, but acknowledged that a reverse image search is not as effective to do “when I've just created a human and I can create hundreds of humans that don't actually exist, but that look real.”
Brewer added that people should be extremely suspicious of government requests that demand immediate action. Government bureaus like the IRS move slowly and are unlikely to make first contact over the phone, email, or text.
“They're going to send letters and it is going to be a slow process,” Brewer said. “So if someone's calling you or texting or emailing you, telling you’ve got to act in the next minutes or days or hours, that's not the time frame the IRS operates on. So you can be sure that it's most likely a scam.”
Ultimately, Brewer said, the best defense against fraud is awareness of the threat.
“That’s really the difference between someone falling victim and not. If you've heard about it, your mind is going to put that into that fraud category,” he said. “Now you're instantly skeptical, whereas if you haven't heard of it, your mind might run and have you send money to someone or do something you'll later regret.”
Dylan Croll is a Yahoo Finance reporter.
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