Generative AI seems to be everywhere these days. It has the potential to “boost GDP and raise labor productivity growth over the coming decade,” according to Goldman Sachs Research, with a measurable impact on the United States GDP starting in 2027.
But it’s not just legitimate businesses that have access to this technology — fraudsters can also use it for their own gains. AI-driven fraud leverages generative AI to develop more sophisticated phishing and payment fraud tactics. This, in turn, creates a cybersecurity nightmare as these attacks are increasingly difficult to detect.
The Evolution of Phishing Attacks
Of course, phishing attacks aren’t new, but they are becoming more difficult to detect as generative AI has altered the way these attempts look and feel. Gone are the days of obvious phishing emails from a “foreign prince” needing urgent financial assistance.
Instead, fraudsters now have the ability to use AI to create:
- Convincing phishing emails
- Realistic messages
- Fake websites that mimic legitimate communications
Spelling and grammatical errors were one of the ways these phishing attempts could be detected, but that litmus test doesn’t hold true with the use of AI. Instead, these attempts are more personalized and are often contextually accurate, thus increasing the risk of employees or customers falling for them. A study published by Harvard Business Review “showed that 60% of participants fell victim to artificial intelligence-automated phishing.”
The Rise of Deepfake Scams
As if receiving a convincing email or text message wasn’t bad enough, generative AI can also produce deepfake audio or video that mimics company executives, vendors, or trusted partners.
Earlier this year, CNN reported that fraudsters tricked a finance worker into paying $25 million using generative AI. In this instance, fraudsters utilized AI to create a video call with what the employee thought was other staff members.
“The worker had grown suspicious after he received a message that was purportedly from the company’s UK-based chief financial officers. Initially, the worker suspected it was a phishing email, as it talked of the need for a secret transaction to be carried out,” the article reads. “However, the worker put aside his early doubts after the video call because other people in attendance had looked and sounded just like colleagues he recognized.”
Phishing and Account Takeover Fraud
Phishing attacks are a common entry point for account takeover fraud, which can be incredibly challenging for businesses to detect and prevent.
When a fraudster successfully obtains sensitive information through a phishing attack, they can use this data to access customer accounts and perform unauthorized activities, like transferring funds, making purchases, or changing account settings. The stealthy nature of these attacks makes it difficult for businesses to distinguish between legitimate and fraudulent activities, especially in real time.
One of the main challenges in detecting and preventing account takeover fraud is the subtlety of the fraudster’s actions. Often, fraudsters mimic legitimate customer behavior to avoid detection, making it hard for businesses to recognize when an account has been compromised. They may start by making small, seemingly normal transactions to avoid triggering red flags or security alerts. This makes it difficult for businesses to act promptly since the signals indicating fraud can be weak or ambiguous.
To make things more complicated, even when there are signals of potential fraud, businesses may hesitate to block transactions outright for fear of inconveniencing legitimate customers or causing friction in the customer experience. This hesitation can give fraudsters the opportunity they need to execute their schemes successfully.
Once a business detects suspicious activity or receives signals that indicate a potential account takeover—such as a sudden change in customer behavior, unusual login locations, or multiple failed login attempts—it’s crucial to have mechanisms in place to confirm the legitimacy of transactions. This is where implementing a credit card scanner can be particularly effective in catching and preventing fraud.
Using Credit Card Scanners to Catch Fraud
When a business suspects fraudulent activity, requiring the user to scan their credit card during a transaction can serve as a crucial verification step. By ensuring that the physical card is present for specific transactions, businesses can quickly confirm both the authenticity of the transaction and the identity of the person attempting to make it.
This approach is especially valuable in situations where there are indications of an account being compromised, but not enough evidence to justify more severe actions, like banning the account. Card scanning functions as an effective form of two-factor authentication, using a card that is known to belong to the legitimate account holder. This method allows businesses to safeguard against fraud while maintaining access for the rightful user, preventing the unnecessary disruption that could occur if harsher measures were prematurely applied.
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