The growing deep fake scam crisis

"AI, powered by quantum computing, is going to put financial crime potentially on steroids."

It’s not my quote. It’s actually a comment made by David Duffy, CEO of Virgin Money (now Nationwide) after visiting Microsoft’s headquarters in Seattle.

From my side, this is an area that’s been worrying me for a while, ever since the deep fake video of Tom Cruise appeared. Did you see that one? (if not watch now)

What is concerning is that there are so many scams out there, what if they became visual and immersive. Take CEO fraud for example. What’s that? Well, just in case you haven’t heard CEO fraud is where a criminal poses as a senior person in the business, in order to persuade staff to make an urgent payment. The request is often made via email, sometimes when the senior person is out of the office, and often puts pressure on the member of staff to transfer millions because they believe the email came from their boss. Now, add a call with the boss to the mix, where they appear to be real but are fake … you get the idea.

Covering this in The Financial Times, they note that:

In the first half of 2023 alone, Britain lost £580mn to fraud, according to UK Finance. Of this, £43.5mn was stolen through police or bank staff impersonations and a further £6.9mn was lost to impersonations of chief executives, the trade body added.

This is not a future thing. It’s a now thing.

By way of example, India is already drawing up regulations to ban such schemes and target the creators and the social media platforms in their approach. Information technology and telecom minister Ashwini Vaishnaw makes the comment: “Deepfakes have emerged as a new threat to democracy. Deepfakes weaken trust in the society and its institutions." Strong words. Totally agree.

Just look at the insurance industry and the rise of deep fake fraud. The issue? People can create fake crimes using AI and get claims settled when no crime took place.

So, how can you protect yourself and your company from deep fake fraud. I guess it goes back to all the usual checks and balances to protect yourself against fraud. After all, if I rang you said you need to send thousands right now … wouldn’t you call me back? In a similar way, if I ever get called by my bank and asked for verification details, I always say I’ll call you back.

Yet, in saying what I just said, there becomes a ridiculous situation of ping-pong. I don’t believe you are who you way you are, so I’ll call you back. I call you back, and you don’t believe I am who I say I am, so you ask me 100 questions to verify my identity.

It’s all about identity, isn’t it? Are you who say you are? Are you the CEO asking for a million dollar transfer or a gangster who has deep faked them?

It’s weird isn’t it that, as technology gets more and more sophisticated, technology is creating more and more ways to scam everyone … but then life never changes. If I’m a criminal, a faker, a scammer, then I’ve always gone to wherever the money is. It reminds me of a comment by a hacker friend of mine – yes, I have those! – and he said: “if you are scamming people, you think like a criminal, and you would even call your grandma to steal her money … the problem most people have is that they don’t think that way”.

In other words, the majority of people trust too easily, and find it difficult to protect themselves and their interests. As deep fake rises beware or, as they used to say in Latin, caveat emptor maximus.