May 16, 2024
It's 2:00 a.m., and you are sleeping soundly when your cell phone rings from an unknown number. You answer the phone to hear your grandson’s voice on the other side. He is in distress and explains he was in a car accident. It was his fault, and he needs some money to get out of the predicament he is in. He begs you not to involve his parents because he will get in serious trouble. Next, he hands the phone to another individual who explains how to send the funds to cover the damage your grandson caused. You quickly transfer the funds because you know the voice on the other end was your grandson’s, and you’d do anything to help him. Unfortunately, you’ve fallen victim to the latest artificial intelligence scam – voice cloning. The voice on the other end was computer-generated, and your grandson is perfectly safe at home. The criminals have vanished with your funds.
"...consumers lost roughly $10 billion due to fraud in 2023. That’s an 11% increase over the previous year."
As technology continues to advance, so do the methods of financial fraud. Seniors, in particular, are often targeted due to their perceived vulnerability. With the integration of artificial intelligence (AI) into various aspects of our lives, the risk of AI-driven financial fraud targeting seniors is on the rise. Federal Trade Commission data released in February showed that consumers lost roughly $10 billion due to fraud in 2023. That’s an 11% increase over the previous year. This number is likely even higher since many cases of financial fraud do not get reported because the victims feel embarrassed and don’t want to report they were targeted by these criminals.
UNDERSTANDING THE THREAT:
AI-based scams are increasingly being employed by fraudsters to perpetrate sophisticated scams that can deceive even the most cautious individuals. On the FBI’s website, William H. Webster, who has served as the director of both the FBI and CIA, explains in a video that he was the target of an elder fraud scheme. Awareness of frequently used schemes is the best tactic to avoid being duped.
"Awareness of frequently used schemes is the best tactic to avoid being duped."
A common tactic involves AI-generated phishing emails or text messages. These messages are crafted to appear legitimate, often mimicking communication from trusted institutions such as banks or government agencies. Through AI, scammers can personalize these messages, making them seem highly convincing. Once a victim falls for the scam and provides personal or financial information, their accounts can be compromised.
Another concern is voice cloning. With the ability to mimic human voices with remarkable accuracy, AI technology can be used to create fraudulent phone calls. Seniors, who may be more trusting of phone communication, are particularly susceptible to this type of scam. Fraudsters can use AI to impersonate loved ones or authority figures, tricking seniors into disclosing sensitive information or transferring money. The scenario described at the beginning of this article, known as the “family emergency” scam, can be extremely convincing and elicit fear in the target victim.
"Fraudsters can use AI to impersonate loved ones or authority figures, tricking seniors into disclosing sensitive information or transferring money."
PREVENTION STRATEGIES:
1. Educate Yourself: Knowledge is the first line of defense against financial fraud. Stay informed about common scams targeting seniors, including those facilitated by AI. Be wary of unsolicited emails, messages, or phone calls requesting personal or financial information. The FBI releases common elder fraud schemes on their website: https://www.fbi.gov/how-we-can-help-you/scams-and-safety/common-scams-and-crimes/elder-fraud.
2: Verify Requests: Before responding to any communication requesting sensitive information or financial transactions, confirm the legitimacy of the sender or caller. Contact the supposed sender directly using verified contact information obtained from their website or official documents. Don’t call the number provided in the suspected fraudulent communication without independently verifying the number is correct, i.e., visiting the company’s website or performing a Google search. Or, in the case of the “family emergency” call, tell the person on the other end that you will call them back immediately, then hang up and call your loved one directly.
3. Stay Vigilant: Be cautious when interacting with AI-driven systems, especially those requesting access to personal or financial data. Regularly review your financial statements and credit reports for any unauthorized transactions or suspicious activity.
4. Seek Assistance: If you're unsure about the legitimacy of a communication or suspect fraudulent activity, don't hesitate to seek assistance. Your Clifford Swan Investment Counselor is the perfect resource to provide an extra set of skeptical eyes. Some clients are hesitant to ask for assistance from family members for fear of seeming naïve. We are happy to review any communication requesting financial data for signs of fraud.
5. Protect Personal Information: Be mindful of the information you share online and offline. Avoid disclosing sensitive details, such as your Social Security number, financial account credentials, or credit card numbers unless necessary.
As AI technology continues to evolve, so must our efforts to combat financial fraud. Through self-education, vigilance, and preventive measures, we can all reduce our susceptibility to fraud and enjoy greater peace of mind in managing our finances. When it comes to protecting against financial fraud, caution and awareness are key.
Download Article: Protecting Against AI-Driven Financial Fraud
The above information is for educational purposes and should not be considered a recommendation or investment advice. Investing in securities can result in loss of capital. Past performance is no guarantee of future performance.
