Generative AI is being rapidly adopted in various sectors for their ability to write text, create code, and generate hyperrealistic photos, videos, and audio—and these features are also proving attractive to fraudsters. The accelerating sophistication of AI scams requires organizations to step up their defenses against bad actors willing to exploit any vulnerability. Read on to understand how AI scams work and discover how to craft strategies to protect your business, keep your customers happy, and drive growth.
What are AI scams?
AI scams use the power and speed of artificial intelligence tools to deceive or manipulate victims on a mass scale, or to target individuals in highly personalized ways. They are similar to typical online scams, but AI algorithms give bad actors additional advantages. Scammers can use common tools to generate convincing fake content, automate phishing attacks, manipulate data, or create deepfakes to impersonate individuals or fabricate false information. AI is also employed to automate attacks at high speed and on a huge scale. According to Sift research, 68% of consumers reported an increase in the frequency of spam and scams following the release of powerful AIs to the general public.
What’s more, this widespread availability is leading to the democratization of fraud, allowing individuals without much technical knowledge to become fraudsters and quickly attack targets.
AI scams pose significant risks, including financial losses, reputational damage, and psychological harm, and these techniques also allow scammers to circumvent many traditional fraud detection techniques. To keep up, businesses must adopt robust cutting-edge fraud prevention measures that stay ahead of AI scams.
What are some common types of AI scams?
Almost half of consumers are finding it increasingly difficult to identify scams. As the threat of AI continues to evolve, staying informed of the risks is your first line of defense. The following are the most typical ways AI scams can be used to harm businesses:
Generating fake content
Generative AI can create convincing fake content in minutes, including text, audio, and video. This material may be used to fabricate information, produce fraudulent advertisements or websites, and even create entire synthetic identities for non-existent individuals to evade Know Your Customer (KYC) protocols, or establish fake accounts that contribute to policy abuse.
Automating phishing attacks
AI-powered phishing attacks use algorithms to craft highly personalized and convincing messages. By analyzing large datasets, AI can tailor phishing emails to specific individuals, increasing the likelihood of tricking recipients into revealing sensitive information or downloading malware.
Creating deepfakes
Deepfake technology uses AI to generate video and audio that impersonates executives, employees, or customers to manipulate targets into carrying out financial transactions or to create fake endorsements and testimonials.
Deepfake technology is sophisticated enough to convince people that a phone call is from one of their own family members. In AI voice cloning scams, which have recently gained significant attention, victims receive a call that sounds like a loved one in distress. The fake relative then asks the target to pay a ransom, bail, or other fee to get them out of trouble.
Fine-tuning social engineering
AI can be tasked with analyzing social media and other online data, which is then used to craft highly targeted and persuasive social engineering attacks. The scammers take advantage of a victim’s psychological vulnerabilities to manipulate them. These tactics are used in account takeovers (ATOs) and pig butchering scams that falsely promise both romance and huge crypto gains. Social engineering scams that result in ATOs lead to 43% of customers abandoning the targeted brand.
Evading fraud detection
Fraudsters may also leverage AI to evade detection by fraud prevention systems. By analyzing patterns in data and adapting their tactics in real time, scammers can slip past detection algorithms and continue their fraudulent activities unnoticed for long periods.
How to detect and prevent AI scams
AI scams already pose an enormous danger to individuals and businesses due to the rapid speed at which they can be executed and their highly convincing nature. As technology continues to advance, these scams will only become more sophisticated and effective. That’s why it’s crucial to implement prevention measures to protect your business and your customers.
Let’s take a closer look at the proactive detection and prevention measures you need to defend against AI attacks:
1. Invest in advanced fraud decisioning technologies
One effective way to combat AI scams is by implementing AI-powered fraud decisioning solutions that leverage machine learning algorithms. These technologies can identify suspicious patterns and anomalies in data, enabling businesses to detect fraudulent activities in real time. With these solutions you can prevent potential scams before they cause significant damage, thereby safeguarding your assets and reputation and ensuring compliance.
2. Implement comprehensive security measures
To effectively protect against AI scams, you need to address the entire customer journey, from account creation to chargeback. This involves identifying and securing all risky user touchpoints, such as account creation, login, purchase, and dispute processes. By applying comprehensive security measures at each stage, you can create a robust defense system that minimizes the risk of AI scams infiltrating your operations.
3. Intervene carefully
While it’s essential to have strong security measures in place, you must also be mindful of how they apply friction in your processes. Overly stringent security protocols can lead to false positives, frustrating trusted customers and potentially impacting acceptance rates. Therefore, it pays to understand how to apply friction only when necessary, striking a balance between security and user experience. By doing so, you can maintain the trust of your customers while effectively preventing AI scams.
4. Anticipate threats
To stay ahead of AI scams, you must be prepared to deal with a wide variety of threats. This includes anticipating and mitigating risks such as promo abuse, fake account creation, account takeover, money movement, and policy abuse. By proactively identifying potential vulnerabilities and implementing targeted prevention strategies, you can build resilience against the ever-evolving landscape of AI scams. Regularly updating and adapting these strategies based on emerging trends and technologies is crucial to maintaining a strong defense against AI-powered threats.
Sift’s AI-powered fraud decisioning outsmarts scammers
As AI continues to improve, scammers will increasingly leverage these advanced technologies to carry out highly sophisticated and convincing scams. The consequences can include substantial financial losses, compromised user accounts, and lasting damage to your company’s reputation.
Sift offers a robust defense against AI-powered fraud, enabling you to protect customer trust and enhance brand loyalty by automatically preventing suspicious activities. It combines intelligent automation, real-time machine learning models, a global data network, and a user-friendly console to provide a comprehensive, flexible approach to fraud prevention without the need for manual intervention.
The Sift Platform allows you to proactively block fraudsters, fine-tune fraud detection mechanisms, and focus your energy on more complex cases, ensuring a safe community environment that fosters growth and success. Sift’s technology adapts to changing trends and behaviors, making it an effective tool against the evolving threat of fraud.
Learn more about how Sift helps businesses prevent content scams.