AI is being used by scammers but it has the power to help fight fraud

Financial fraudsters and scammers are getting ever more sophisticated and are using advanced technologies to assist them in their activities. AI has the power to quickly spot anomalous patterns and stop fraudsters in their tracks. With more people being targeted, what are businesses doing to protect their customers and themselves?

Rise in scams

Fraudsters and scammers thrive when there is disruption, and recently there has been a lot of disruption and opportunity for them, says Katherine Gillespie, head of forensic at KPMG. “Some examples are the disruption caused by the pandemic or the technological disruption caused by generative AI.

“In the case of generative AI, which can create text and images, we are starting to see fraudsters use this technology to create synthetic IDs and deep fakes,” says Gillespie. “These fake profiles are being used to evade controls put in place to prevent fraud.”

Common financial scams

Scammers are becoming more organised and sophisticated, says AIB’s head of financial crime, Carol Lawton. “The main scams are texts that can sometimes be followed up by a phone call to the customer to get further details to complete the fraud. Examples include a text to say you owe a toll charge, a text from a bank to say your account has been compromised or a text from a utility company to say your bill is overdue.

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“People click on the link in the text and it brings them to a fraudulent website that tries to get further details, including what bank you are with. The criminals then present web pages that are very similar to the website of the person’s bank and the person thinks it’s genuine.”

Protecting yourself – and your business

Awareness about this issue is high and most people have received fraud-prevention messages and warnings from their bank, on social media, in newspapers and on TV and radio, says Lawton. “When people are defrauded, the common link is often that they’re distracted when the text or call is received and they believe it is genuine and give all the details to the criminals. If people could keep the catchphrase ‘don’t click on the link’ in their minds and be sure to get a second opinion before reacting to a call or message, it would help protect them from these criminals.

“The response to this type of crime requires a joined-up approach across society. Banks have a responsibility to ensure they have robust fraud prevention and detection controls as well as customer education programmes. Social media companies should ensure robust prevention models are in place to stop the fraudulent placement of ads on social media by criminals and to ensure that these fraudulent websites that act as traps for customers are not set up in the first place.”

The telecommunications industry should ensure it is doing all it can to prevent the distribution of texts and calls from online fraudulent sites, Lawton says. “Businesses should ensure that all staff are aware of the current scams, what they look like and that no payments are made without a robust approval process involving several people. Customers should ensure that every unexpected or unusual request for payment is treated with extreme caution. This whole-of-society approach should be underpinned by the work of the gardaí and the relevant state authorities to allow us all come together to tackle fraud and protect people.”

AI and the fight against fraud

AI is good at identifying patterns, so it is used to monitor transactions and to identify suspicious transactions that could be an indication of fraud, says Gillespie. “AI is also being used by financial institutions to support customer identity and verification checks.”

Unfortunately, AI is not a panacea and it will not cure us of fraud, Gillespie says. “Fraudsters are always trying to find new ways to deceive us and access our hard-earned money. They will adopt new technologies as they evolve and so we must also be open-minded and curious about how we can use new technologies in the fight against fraud. Critically nobody can delegate fraud prevention – technology will play its part in its prevention and detection but we all have a role to play.”