AI-Powered Financial Scams on the Rise: Experts Warn and Offer Solutions

AI is fueling the biggest financial scams ever -- cyber safety experts are fighting back

The recent Bybit hack - the largest crypto heist in history - has highlighted an alarming trend: cybercriminals are increasingly leveraging AI alongside advanced social engineering techniques such as deepfake technology and targeted phishing to execute financial scams at an unprecedented scale. The sophistication of these attacks underscores the urgent need for continuous innovation in cybersecurity to counter evolving threats in the digital landscape. As AI continues to shape the future of financial fraud, the primary challenge is ensuring that security measures evolve by defensively leveraging AI to outpace increasingly intelligent and deceptive cybercriminal tactics. The number of financial scams is on the rise, and while not all are driven by AI, the technology is clearly amplifying both their scale and success rate. AI is being used to personalize scams, making them more convincing and difficult to detect. A recent notable example saw deepfake videos of Elon Musk promoting fraudulent cryptocurrency giveaways, exploiting Musk's trusted public persona. Victims were lured in through hijacked social media accounts and fake investment schemes, believing they were engaging with legitimate opportunities. The scam resulted in over $7 million in stolen funds before it was detected and shut down. Another concerning trend is the rise of AI-powered phishing attacks. Unlike traditional phishing emails, which often contain errors and generic language, AI-generated phishing campaigns use machine learning to tailor their language and formatting, significantly enhancing their believability. These attacks are further enhanced by AI chatbots programmed to engage with victims in real time, convincing them to divulge sensitive information or transfer funds. AI-powered scams are increasingly being distributed through social media. Platforms with targeted advertising are becoming prime targets for fraudsters, enabling precise demographic targeting with highly convincing scams. According to Gen's Q4/2024 Threat Report, Facebook accounted for 56% of total identified social media threats, followed by YouTube at 26%, X (formerly Twitter) at 7%, with Reddit and Instagram each accounting for 5% and 4%. Scammers exploit these platforms to distribute deceptive online ads (malvertising), fake e-shops, and phishing campaigns, leveraging AI to enhance the believability and reach of their schemes. As AI continues to enhance scam sophistication, social media platforms remain one of the most vulnerable spaces, requiring both users and businesses to be increasingly vigilant. Without stronger safeguards, cybercriminals will continue to manipulate these platforms, making it imperative for security measures to evolve in tandem with these emerging threats. While AI is being leveraged by fraudsters, it is also a crucial tool in countering cybercrime. AI-driven security systems can detect fraudulent activity in real time by analysing behavioral patterns and identifying anomalies. These technologies help flag suspicious behavior, detect deepfake content and prevent financial fraud before it occurs. AI-powered fraud detection tools can now recognize scam patterns across multiple platforms, including social media, email and messaging apps. Automated threat response mechanisms help intercept phishing attacks before reaching users, while AI-enhanced content verification can identify and mitigate deepfake scams. As threats continue to evolve, these technologies play an essential role in securing both individuals and businesses from financial fraud. Individuals should remain vigilant with unsolicited financial requests, verify identities during high-stakes interactions, and use multi-factor authentication to secure their accounts. While it's helpful to look for deepfake indicators -- like unnatural blinking or mismatched lip movements -- AI-generated videos are becoming so realistic that spotting them with the naked eye is quickly becoming impossible. That's why it's essential to rely on verification practices, not just visual cues. Avoiding oversharing personal information on social media is also crucial, as scammers can exploit this data to craft highly targeted and convincing attacks. Businesses should adopt a proactive approach. Employee training on AI-driven scam tactics is essential, as is implementing strict financial verification procedures that require multiple approvals for large transactions. Companies should deploy AI-based fraud detection systems to identify anomalies in financial transactions and proactively monitor brand impersonation attempts on social media and the web. Additionally, fostering a security-aware culture within the organization strengthens overall defense. As AI continues to shape both cyber threats and defenses, security strategies must evolve at the same rapid pace. Integrating AI-driven security automation is no longer optional - it is essential for staying ahead of increasingly sophisticated fraud tactics. Check out the best cloud firewall.

Experts Explain Ways to Safeguard Against AI-Enhanced Scams | Newswise

Newswise -- Scams enhanced by artificial intelligence (AI) have the potential to reach a new level of deception with the introduction of features such as ChatGPT 4o, that allow users to create convincing, photorealistic images, including fake documents, and realistic deepfake voices. A panel of Virginia Tech experts, including computer ethics educator Dan Dunlap, digital literacy educator Julia Feerrar, cybersecurity researcher Murat Kantarcioglu, and criminologist Katalin Parti, discussed the implications of this ever-advancing technology. They cautioned against relying only on the safety measures built into the AI tools in order to avoid scams and explained ways to be vigilant and protect data, including the potential use of blockchain. Dan Dunlap on educating the public about fraud detection "Scams using AI are certainly newer and more widespread, and the increasing scale and scope are immense and scary, but there is nothing fundamentally new or different about exploiting available technologies and vulnerabilities for committing fraud. These tools are more accessible, easier to use, higher quality, and faster, but not really fundamentally different from previous tools used for forgery and fraud," Dunlap said. "There is a constant need to educate the public and update detection and policy as criminals use the available tools," he said. "Computer science professionals have a moral obligation to help in both educating the public and developing tools that help identify and protect all sectors." "Unfortunately, disseminating knowledge can also help to exploit the weaknesses of the technology," Dunlap added. "Powerful, available, and accessible tools are destined to be co-opted for both positive and negative ends." Julia Feerrar on watching for telltale signs of scams "We have some new things to look out for when it comes to AI-fueled scams and misinformation. ChatGPT 4o's image generator is really effective at creating not just convincing illustrations and photo-realistic images, but documents with text as well," Feerrar said. "We can't simply rely on the visual red flags of the earliest image generators." "I encourage people to slow down for a few extra seconds, especially when we're unsure of the original source," she said. "Then look for more context using your search engine of choice." "Generative AI tools raise complex questions about copyright and intellectual property, as well as data privacy," Feerrar warned. "If you upload your images to be transformed with an AI tool, be aware that the tool's company may now claim ownership, including to further train the AI model." "For receipts or documents, check the math, the address -- basic errors can be telling. Large language models struggle with basic math. However, know that a committed scammer can likely fix these kinds of issues pretty easily. You should also be asking how this image got to you. Is it from a trusted, reputable source?" she said. "Basic digital security and anti-phishing advice applies whether a scammer uses generative AI or not. Now is also a great time to set up 2-factor authentication," she added. "This kind of decision-making is a key part of what digital literacy and AI literacy mean today." Murat Kantarcioglu on using blockchain to prove files are unaltered "It's very hard for end users to distinguish between what's real versus what's fake," Kantarcioglu said. "We shouldn't really trust AI to do the right thing. There are enough publicly available models that people can download and modify to bypass guardrails." "Blockchain can be used as a tamper-evident digital ledger to track data and enable secure data sharing. In an era of increasingly convincing AI-generated content, maintaining a blockchain-based record of digital information provenance could be essential for ensuring verifiability and transparency on a global scale," Kantarcioglu said. He also offered a simple but powerful low-tech solution: "A family could establish a secret password as a means of authentication. For instance, in my case, if someone were to claim that I had been kidnapped, my family would use this password to verify my identity and confirm the situation." Katalin Parti on the profiles of scammers and victims "The accessibility of AI tools lowers the barrier for entry into fraudulent activities," Parti said. "Not only organized scammers, but loner, amateur scammers, will be able to misuse these tools. In addition, countries may use these tools for disinformation campaigns, creating fake documents to influence public opinion or disrupt other countries' internal affairs." "The primary targets of these AI-enhanced scams include but are not limited to: job seekers, investors, consumers, and businesses. Since our proof system is primarily visual, and it's increasingly harder to tell AI-generated images from realistic ones, this makes scams even harder to detect," she said. Parti suggested an unexpected strategy beyond standard procedures already in place: "The imperfect nature of human-created visuals might be successfully used as a control in order to judge what is real as opposed to AI-made images."