AI-powered scams: How you can help protect yourself
Managing Director, Head of Wealth Management Banking & Liquidity
By Marlene Ross, Fraud Manager for J.P. Morgan Wealth Management and Angelena Mascilli, Managing Director, Head of Wealth Management Banking
Imagine this: You receive a frantic phone call from your loved one who sounds distressed and is asking for help. Before you can ask what’s wrong, the voice of an unknown individual states they have kidnapped your loved one and demands payment for their release. What do you do?
Despite the fear and panic that is likely to ensue, a sound first step could be to verify the validity of the call. A few ways to do that include hanging up and calling back your loved one’s phone number to double-check if they are truly in danger, calling another loved one to see if they have received the same information or asking for specific information only your loved one would know. Taking this step could potentially save you from a financial scam.
Financial scammers are getting smarter, using AI to be more believable
The impact of fraud persists, as evidenced by the FBI’s 2024 annual report, which showed over $16 billion in reported losses, marking a 33% increase from 2023. Fraudsters are now using artificial intelligence (AI) to put a new, sophisticated spin on age-old scams. Before, a simple email phishing attempt could be recognized by relatively simple grammatical errors or misspelled words. Now, AI can improve grammar, tone and intonation to make emails more convincing, as well as create convincing digital footprints and identities that can mimic the voices of people we know.
In this article, we will walk through things you can do to protect yourself from such schemes. But before we do, let’s review some common AI scams so you are aware of what to expect.
Common scams that leverage AI
Below are three common types of AI scams you may encounter – please note that this list is representative and not exhaustive.
- Bank or government official impersonations: AI can create realistic audio or video clips (i.e., deepfakes and synthetic media) that impersonate executives or celebrities, for example, tricking victims into transferring money or sharing sensitive information. Convincing imitators can falsely urge targets to resolve an issue quickly, often demanding immediate payment or information to avoid further consequences. A couple of examples include emails allegedly sent from a major bank notifying the recipient of suspicious activity or calls from scammers claiming to work for the Internal Revenue Service.
- Social engineering: Fake phone calls, texts or emails have long been used to trick targets into sharing confidential data or sending funds to a fraudulent account. AI-generated profile pictures and videos can be used to create fake social media accounts or dating profiles, and it can also be used to analyze publicly available data to personalize these phishing attempts, increasing the likelihood of success. What’s more, the convenience of messaging platforms enables fraudsters to blast these types of communications to hundreds of targets instantly. Some examples include fake invoices for a product or service that was never ordered or a scammer creating a fake social media or dating profile to lure someone into an online relationship, gain their trust and ultimately fake an emergency or other unfortunate scenario to ask the victim for money.
- Extortion scams: AI can craft convincing phishing emails or texts that can mimic legitimate communications with trusted contacts, making it harder for recipients to spot fakes; it can also leverage synthetic media to mimic the voices of people you know for defrauding purposes. Extortion types of scams simulate emergency situations involving loved ones in financial distress to obtain payments or sensitive information from targets, like the example detailed at the beginning of this article.
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How you can help protect yourself against AI scams
One common thread is scammers push on an emotion like greed, lust or fear to make you take action quickly – so take the time to stop, think and inquire. Slowing down could make the difference in stopping a scam from occurring. Another thing to remember is that requests asking for your personal information, asking to take control of your computer or requiring payment in non-traditional forms of currency (like cryptocurrency or gift cards) can be red flags of a scam.
The fraud landscape will continue to evolve as the AI industry does the same, so it’s important to have a plan in place to maintain your security. Consider the following when researching ways to protect yourself:
- Get informed: Educate yourself about what’s going on in the industry. Learn about the latest trends and best practices, and develop a plan for how to integrate them into your daily life.
- Secure your accounts: Make use of available tools such as multi-factor authentication to help protect your accounts, and enable account alerts to get notified of any unauthorized activity.
- Ask the specialists: Leverage your banker and financial advisor for the latest insights and information surrounding fraud prevention. Schedule time to discuss available account controls and other strategies you can enable to keep your assets and information secure.
How banks can use AI to help protect you
Criminals aren’t the only ones leveraging AI, though – financial institutions are using it as well to combat fraud. Speed, accuracy, scalability and detection are just a few of AI’s benefits that can help protect sensitive client assets and personal information. AI systems can also lower operational costs, automate tasks and provide advanced data analysis to help banks identify fraud trends and develop preventative measures in response.
Below are three examples of how financial institutions can use AI to help protect you and your assets – please note that this list is representative and not exhaustive.
- Transaction monitoring: This involves high-speed detection and comparison of financial activity against an individual’s historical behavior, which can spot out-of-pattern transactions to be escalated for additional scrutiny.
- Behavioral biometrics: Behavioral biometrics refers to the data collection of repetitive actions such as typing speed, login frequency and mouse movements help spot deviations and trigger enhanced verification.
- Predictive prevention: Predictive prevention includes simulated attacks to stress test controls and identify potential vulnerabilities before they can be exploited.
The bottom line
While financial institutions typically deploy sophisticated fraud prevention strategies, you are a key player in preventing fraudulent activity. The more steps you take in advance to keep yourself secure, the less likely you are to fall victim to these kinds of scams. If you believe you have been targeted by a financial fraud scheme, please contact your financial institution to learn more. You can also explore resources like FINRA’s scam and fraud meter, the Federal Trading Commission’s (FTC) Consumer Advice Hub for up-to-date information on scams or the FBI’s Internet Crime Complaint Center (IC3) website to report a suspected scam.
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Managing Director, Head of Wealth Management Banking & Liquidity
