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Fraud Alert: AI is the Scammers’ Latest Tool to Trick You, and Your Bank

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Just when you thought the danger from fraudsters and scammers couldn’t get any worse, now comes the latest trend in financial scams: artificial intelligence. Scam artists have embraced AI as the newest tool in their efforts to separate you from your bank account and your identity.

What makes this all the more frightening is that the new AI tools are so sophisticated, even savvy professionals are getting sucked into the trap. That’s reason enough why seniors and their families need to redouble their vigilance to avoid being victimized.

We just came across this powerful article from the Wall Street Journal in which reporters Dalvin Brown and Katherine Hamilton tell readers how artificial intelligence is helping scammers trick victims and even hoodwink banks and other financial institutions. While the article isn’t targeted specifically at seniors, it’s clearly applicable to all of us. (Please note that a subscription may be required to access the Wall Street Journal article.)

Artificial Intelligence is Making Life Simpler for Scammers

Brown and Hamilton begin with the warning: artificial intelligence is making scammers even more challenging to identify.

“Gone are the poorly worded messages that easily tipped off authorities as well as the grammar police,” they write. “The bad guys are now better writers and more convincing conversationalists, who can hold a conversation without revealing they are a bot, say the bank and tech investigators who spend their days tracking the latest schemes.”

Not only that, but imitation is becoming easier and easier with tools like ChatGPT, which can impersonate senior executives, demand wire transfers, and handle other criminal copycatting.  

You Can’t Rely on Intuition to Protect Yourself

“Your spidey senses are no longer going to prevent you from being victimized,” says Matt O’Neill, a former Secret Service agent and co-founder of cybersecurity firm 5OH Consulting.

In some ways the playbook hasn’t actually changed much: today’s frauds are often similar to their older counterparts. However, AI tools allow scammers to target larger groups and provide access to more information, making the scam seem even more legit.

“Fraud-prevention officials say these tactics are often harder to spot because they bypass traditional indicators of scams, such as malicious links and poor wording and grammar,” the article adds.

Fake ID with Computer-Generated Faces

Experts and officials warn that today’s criminals are faking official ID—like driver’s licenses—to open new bank accounts; computer-generated faces and graphics easily mimic identity-verification processes. This makes them harder to guard against.

Thankfully, some institutions are fighting back. For example, JPMorgan Chase has started to use large-language models to beat identity fraud at its own game, according to Carisma Ramsey Fields, the vice president of external communications there. The bank has also upped their efforts to teach customers how to spot scams. 

“And while banks stop some fraud, the last line of defense will always be you,” Brown and Hamilton write. “These security officials say to never share financial or personal information unless you’re certain about who’s on the receiving end. If you do pay, use a credit card because it offers the most protection.”

Lois Greisman, associate director of the Federal Trade Commission, adds, “Somebody who tells you to pay by crypto, cash, gold, wire transfer or a payment app is likely a scam.”

Scammers Reaping Record Profits from Their Schemes

Sadly, these AI-based tactics are paying off big-time for scammers. “People reported losing a record $10 billion to scams in 2023, up from $9 billion a year prior, according to the FTC. Since the FTC estimates only 5 percent of fraud victims report their losses, the actual number could be closer to $200 billion,” Brown and Hamilton write.

They go on to tell the story of Joey Rosati, owner of a small cryptocurrency firm, who believed he was pretty savvy about scams until a person claiming to be a police officer called him in May. The man told Rosati that he had missed jury duty, and seemed to know all kinds of information about him, including his Social Security number and his recent move to a new house.

The scammer went on to give the instruction that Rosati report to the police station in Hillsborough County, Florida, which seemed like a legitimate request, and certainly not something a criminal would ask for.  

It was only on the drive over that Rosati was asked to send $4,500 to take care of the fine. He realized he was being scammed and hung up.

“I’m not uneducated, young, immature. I have my head on my shoulders,” Rosati says. “But they were perfect.”

Scammers Dig for Personal Details in Several Places

“Social-engineering attacks like the jury-duty scam have grown more sophisticated with AI,” Brown and Hamilton explain. “Scammers use AI tools to unearth details about targets from social media and data breaches, cybersecurity experts say. AI can help them adapt their schemes in real time by generating personalized messages that convincingly mimic trusted individuals, persuading targets to send money or divulge sensitive information.”

In another version of a similar scam, David Wenyu received an email in May offering a job opportunity after he placed an “open to work” banner on his LinkedIn profile. It appeared to be from a legitimate company called SmartLight Analytics. Wenyu had lost his job six months prior and was feeling the pinch, so he accepted the job.  

Brown and Hamilton explain, “[Wenyu] accepted the offer, even though he noticed the email address was slightly different from those on the company’s website. The company issued him a check to purchase work-from-home equipment from a specific website. When they told him to buy the supplies before the money showed up in his account, he knew it was a scam.”

Wenyu himself adds, “I was just emotionally too desperate, so I ignored those red flags.”

Criminals Are More Skilled at AI than the Banks

On the whole, banks are struggling to stay ahead of the advances in tech. Brown and Hamilton write, “In an April survey of 600 fraud-management officials at banks and financial institutions by banking software company Biocatch, 70 percent said the criminals were more skilled at using AI for financial crime than banks are at using it for prevention.”

This is corroborated by Kimberly Sutherland, vice president of fraud and identity strategy at LexisNexis Risk Solutions. She says that there had been a noticeable rise in fraud related to AI this year, including the ability for scammers to quickly cross-reference and test reused passwords across platforms. They can use AI to write code that automates their processes, making the whole thing more efficient and damaging.  

“If scammers obtain your email and a commonly used password from a tech company data breach, AI tools can swiftly check if the same credentials unlock your bank, social media or shopping accounts,” Brown and Hamilton warn.

Fighting Fire with Fire: Using AI Against Scammers

But AI tools are just that: tools. That means that they can be used for good or ill. Financial institutions are attempting to use AI to guard against scams and protect your data and finances.

“Banks monitor how you enter credentials, whether you tend to use your left or right hand when swiping on the app, and your device’s IP address to build a profile on you,” Brown and Hamilton explain. “If a login attempt doesn’t match your typical behavior, it is flagged, and you may be prompted to provide more information before proceeding.”

Jim Taylor, chief product officer at RSA Security—a firm used in fraud-detection by Wells Fargo, Citibank, and others—explains that these systems can “tell when you’re being coerced into filling out information, because of shifts in your typing cadence.” They can also tell if “digits are copied and pasted”, if “voice verification is too perfect”, or if “text is too evenly spaced and grammatically correct.” All of these are red flags easily identified by a computer.  

If Something Doesn’t Feel Right, Hit “Pause”

“Consumers paid scammers $1.4 billion in cryptocurrency in 2023, up more than 250 percent from 2019, according to FTC data. As a result, security officials suggest that you turn on two-factor authentication, so you get a text or email whenever someone tries logging into one of your accounts,” Brown and Hamilton write.

Moreover, they add, if anything feels off during a potential exchange of money, always “take a beat.”

“Pressing pause on a potentially fraudulent situation is also important psychologically,” they suggest. “Many scammers try to create a false urgency or confuse victims to manipulate them. If all the information about a transaction or account is coming from one person, that is a red flag. Get a second opinion from a trusted contact.”

The article concludes with the words of Matt O’Neill, the former Secret Service agent: “If it’s going to hurt if you lose it, validate it.”

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(originally reported at www.wsj.com)

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