Journalists Dalvin Brown and Katherine Hamilton authored an excellent piece for The Wall Street Journal earlier this summer on how AI (artificial intelligence) is upping the game for scammers. In it, Matt O’Neill is quoted as saying, “Your Spidey senses are no longer going to prevent you from being victimized.” Matt is a former Secret Service agent turned cybersecurity firm co-founder. He’s well poised to know just how AI is changing the fraud landscape.
Brown and Hamilton’s article, “AI Is Helping Scammers Outsmart You—and Your Bank,” shares the prevention measures some financial institutions are taking to fight identity fraud. The Federal Trade Commission’s data on fraud losses by payment method for bank transfers/payments and cryptocurrency are staggering, with the former jumping from $1.73 billion in 2019 to an incredible $18.61 billion in 2023. In 2019, Cryptocurrency losses were barely on the map at $0.34 billion. Fast forward to 2023 and they jumped to $14.10 billion. Of all the variety of scams out there, investment related leads the pack, followed by imposter scams. While scammers may call, email, or text you, social media is king. That platform alone was responsible for more than $14 billion in losses. The article has examples of sophisticated scams and a valuable summary of how AI-based software, tools, and bots have taken fraud to a new level of tailored targeting. The read is worth your time.
Banks and other financial institutions are fighting back by using AI themselves to shield their customers from fraud. A bit of fighting fire with fire. That will help, and these institutions and every company you deal with should be doing their utmost to protect their customers from the devastation of fraud. It’s an emerging battle between good and evil.
But let’s not become overwhelmed and hopeless when it comes to preventing fraud.
One line in the article rings true: “…the last line of defense will always be you.”
Despite the sophistication of the scams, many of the same defenses still apply. Unless you have lived completely off the grid up to the point of reading this blog piece, it is safe to assume that your personal information is out there for use and aggregation by AI tools. Despite our best efforts, countless data breaches have exposed our personal information. We are a culture of digital lives. We like to overshare on social media and value convenience and efficiency over complexity. But hope is not lost.
Below is a partial list of basic human-powered defenses to consider implementing. Small steps can have a significant impact in building a solid foundation, no matter how sophisticated the fraud landscape becomes. It’s helpful to think of fraud in terms of that which is perpetrated against you (behind the scenes), and that which is perpetrated with your willing engagement. The first three tips below relate to strategies to help avoid fraud that is perpetrated against you. The latter are steps you can take to not become a willing participant.
Passwords
It cannot be emphasized enough that your passwords should be long, strong, and unique. With AI, cross-referencing stolen credentials across multiple platforms is incredibly fast. Despite the availability of password management systems and advice from security experts, people still tend to select passwords that have a special meaning to them. Large language models (a type of generative AI) have made it possible to speed up the previously laborious and manual process of trying to guess at these by using AI to quickly generate a list of possibilities based on publicly available data (like your social media accounts). Use a password management system to generate unique passwords for every site you use.
Multi-Factor (MF) Authentication
MF authentication uses something you know with something you have to add an extra layer of account security. What you know is your password, and what you have could be your cell phone or a security fob. If your account offers multi-factor authentication (and we would hope they do), turn it on.
Security Freeze
AI has ushered in new ways for criminals to try and perpetuate identity theft through faking identity verification processes, using voice cloning, and altering identification documents. These efforts can still be thwarted by an old-fashioned security freeze with all the credit bureaus. This prevents creditors from accessing your credit report and when opening accounts. The process has been simplified in recent years and is free to use. Keep the security freeze in place until you need to lift it temporarily for your own needs and then refreeze for protection. Clients of The Wealth Conservancy can contact their advisor for assistance with this process.
Education
It is critically important for consumers to be aware of current scam trends. Pay yourself, pig butchering, and catfishing are several types of criminal schemes; kitschy names, but they all have similar tactics. They use emotion and a sense of urgency to perpetuate their fraud. You don’t have to be a cyber expert. Just an awareness of the criminal landscape of fraud can reduce your susceptibility to it. Scam Spotter, a collaboration between Google and Cybercrime Support Network, is one resource you can use to get information on emerging scams, practical advice, and trusted resources.
Trust No One
Ok, that’s just a favorite line from The X Files, but Fox Mulder was on to something.
- Do not engage. The best way to avoid being scammed is not to engage.
- Do not open attachments or click links in unsolicited or unanticipated emails.
- When something sounds too good to be true, it usually is. Free vacations, lotteries, sweepstakes, cash grants, and the like are almost certain to be scams.
- Do not offer to receive goods, money, or gift cards for someone else’s benefit.
- Do not confirm or update personal information solicitated by emails, phone calls, social media, or text messages.
- Being asked for payment by wire, gift cards, and cryptocurrency is a huge red flag.
- Slow down! Scammers and imposters create a sense of urgency and will pressure you to act immediately. Acting fast reduces your ability to think clearly and carefully and to evaluate what is going on.
There are no guarantees when it comes to fraud prevention. However, by being educated, staying vigilant, practicing good security hygiene, and having a healthy dose of suspicion, you will be better situated to spot scams and protect yourself. You are always the first and last line of defense. Clients of The Wealth Conservancy are encouraged to contact their advisor for additional advice and resources.
Disclaimer:
References on this website to any specific commercial products, process, information, service, manufacturer, or company do not constitute endorsement or recommendation by The Wealth Conservancy, Inc. It is your responsibility to verify and investigate providers and services.
Readers without a subscription to The Wall Street Journal may not be able to view the articles in their entirety.