Rising Threat of AI-driven Fraud

AI is rapidly evolving to benefit almost every aspect of our lives. Unfortunately, that includes the lives of criminals.

Thanks to widely available AI programs with the power to both create and alter content, fraudsters now have a range of tricks up their sleeves. They use them in simple or highly sophisticated schemes to exploit individuals and businesses alike.

Get to know the methods and effects of AI fraud, as well as the best ways to protect your organization from bad actors equipped with artificial intelligence.

How AI-Driven Fraud Threatens Industries

Fraud is a common problem for companies, and it’s expected to worsen with the help of increasingly complex tools like AI algorithms.

In 2022, fraud outlook surveys found that 71% of organizations experienced internal and external fraud, and 77% believe the risk of cybercrime will grow in 2023. Something else the majority of respondents agreed on – 59% to be exact – is that pre-pandemic anti-fraud controls are outdated for the current working environment and its dangers.

Take deepfake, for example, one of several malicious uses of artificial intelligence that plagues the modern corporate landscape. By layering one face over another, criminals can impersonate staff members or extort them into sharing sensitive information. It’s also possible to create false IDs, documentation, and video content in order to bypass KYC checks.

Fraudsters employ voice spoofing and generative AI, too, to perfect everything from email phishing to synthetic identity fraud. If that’s not bad enough, you don’t have to be an expert hacker to use the necessary tools.

Crime-as-a-service (CAAS) brings everything you’d need to the table, including AI software. Programmers create deepfake and voice spoofing tools, for example, and sell them online to support illegal schemes on the black market.

How to Counter AI-Driven Fraud

There’s no doubt about it: The digital landscape is a risky place to be, even more so for lucrative businesses. The good news is that you can indeed combat fraud, no matter how sophisticated it is – but you still need the right methods and tools.

Check your business for anything a criminal might want, such as money, accounts, sensitive information, and contacts. Then, see how robust your frameworks are, especially for cybersecurity and risk management, before patching up your vulnerabilities with better software and policies.

1. Data Analysis With AI Capabilities

AI is your best friend against AI. You need to streamline your fraud detection and prevention processes, and automation can do that like nothing else.

What’s also important is that you focus your efforts on organizing and assessing the information users provide. Once you and your AI-based data analytics understand your company’s normal data patterns, it’s much easier to spot and investigate suspicious activity.

2. Transaction Monitoring

AI-based data management has a lot to do with the behavior analysis of customers, but also workers – if only to avoid internal crimes. And keeping an eye on your service’s financial elements is essential.

When it comes to flagging up bad actors, many of their illicit transactions can be highlighted through transaction monitoring solutions. A customer or entity might have inconsistent or hidden details when making a payment, to name just one example. In fact, they could also be making big insurance claims, payments, or deposits – all of which prove even more suspicious when there’s no clear source of income. Each time a reason for concern arises, it increases the likelihood that this person or organization could be involved in fraud, money laundering, or other criminal activities.

Any business with an online presence and monetary components could prepare itself to identify this kind of activity, even if it’s aided by artificial intelligence. The best way to counter such suspicious behavior is to check users’ transactions, payment methods, and overall accounts.

3. Risk Detection for User Profiles

It’s a good idea to monitor users from the moment they register to use your service. Make sure their personal details add up, such as their name, email address, location, and payment preferences.

You want to feel safe with them from the get-go. If your risk management protocols find something unusual, investigate further before giving them access to your systems.

Once a user has an account, pay attention to their data patterns. You’re looking for signs like those mentioned above, as well as sudden changes to their activity. It could mean that they’ve joined something illegal or had their account taken over.

It’s true that the more users you have, the harder it is to handle all of this. Businesses of all sizes need robust automated and manual frameworks that carefully monitor users and counter threats as fast as possible.

4. Strict Security Checks and Policies

With the rise of tools like virtual IDs, banking apps, and payment methods, the anti-money laundering market alone reached $1.32 billion in 2022 and should grow by another 15.9% in 2023. It’s a reaction to the need for enhanced safety measures against criminals who also follow tech and cybersecurity trends.

There are several processes to consider when combating fraud in particular, but the most important ones involve verifying a new user’s identity and risk-free status.

By fully complying with KYC and AML regulations, your foundation should already be strong. But don’t hesitate to go the extra mile with your due diligence checks.

Since we’re talking about AI-driven fraud, apply measures such as adverse media screening, anti-phishing checks, social media lookups, and predictive analytics. Make it easier for your business to counter schemes that involve such threats as social engineering attacks and fake IDs.

5. Training for AI Fraud Detection

Your main defense against criminals with smart tools is a workforce that knows exactly how to deal with them while minimizing the impact on your business and its customers.

Give your workers as much training as necessary. At the very least, cover the types of fraud they might encounter, how AI technology enhances them, and what the best tools and techniques are for spotting and investigating bad actors.

Use Your Own Intelligence to Tackle Fraud With Artificial Intelligence

Artificial intelligence pushes boundaries in terms of what you can do online, but also what threats individuals and whole companies now have to face.

One wrong click or misplaced trust can cost you everything, from your business and clients to your finances and reputation. So, if you have assets worth stealing or exploiting, it’s a mistake to ignore the risks.

Firstly, learn all you can about cybercrime, cybersecurity, and AI technology, both legal and illicit. Reinforce your organization with the most efficient systems for detecting and preventing fraud. Then, get creative when scanning for AI-generated photos, audio, or documents. Trust your instincts just as much as you do your computer programs.

[To share your insights with us, please write to sghosh@martechseries.com]