AI scams contribute to rise in investment fraud

investmentnews.com:

Advances in AI technology are contributing to an unprecedented rise in investment fraud.

Americans are losing more to investment schemes than any other type of fraud, with $3.82 billion stolen in 2022, according to data from the Federal Trade Commission. That represents an increase of $1.67 billion, or 128%, over 2021.

Fraudsters are developing new scams that exploit recent advances in artificial intelligence technology. For example, one woman in Canada lost $750,000 in a scammer who used a “voice clone” of billionaire Elon Musk to direct her to a website where she could buy shares of his stock for $250.

Similar scams are employing “deep fakes,” which use a form of AI called deep learning to generate fake videos of real people. Scammers create a deep fake of a corporate executive and send it to investors, said Chase Carlson, founder of Carlson Law, a firm specializing in investment fraud. In a recent report that analyzed data from the FBI and the Federal Trade Commission, Carlson cited AI schemes as one of the five most common types of investment fraud in 2023.

To avoid these schemes, investors should always meet someone in person before investing, and if they have to rely on phone calls, they should listen carefully as voice cloning can lack human inflection, Carlson said.

“And if it involves a celebrity or sounds too good to be true, it usually is,” he said.

While there aren’t any documented cases of these type of frauds hitting wealth management firms yet, they are likely coming soon, said Mark Hurley, CEO of cybersecurity firm Digital Privacy & Protection. AI is creating a problem that even the best cybersecurity practices will struggle to prevent.

Scammers can easily clone an advisor’s voice — for example, by