How to Shield Your Business From AI-Generated Fraud

June 25, 2024

Business fraud was on the rise before artificial intelligence (AI) became more widely used, and now this new technology poses an even greater threat.

As AI becomes increasingly sophisticated, its application in fraudulent activities poses a significant challenge to businesses everywhere. To navigate this evolving landscape effectively, business owners must arm themselves with knowledge and adopt proactive measures to protect their financial assets and sensitive data.

What You Need to Know: Understanding the Types of AI-Enabled Fraud

AI-Generated Phishing Emails
AI’s ability to analyze behavioral data has given rise to phishing emails that are alarmingly personalized, significantly upping the ante for deception. By imitating the writing style of familiar contacts, these emails can trick recipients into believing they are legitimate communications, leading to the inadvertent sharing of sensitive information. Imagine a scenario in which a seemingly trustworthy invoice request from a known vendor turns out to be an AI-crafted phishing attempt – a reality for some businesses.

Transaction Fraud
AI doesn’t just mimic; it learns. By studying normal spending patterns, it can execute unauthorized transactions that fly under the radar, blending seamlessly with genuine activity. This includes conducting small transactions to test stolen credit card details or employing techniques to validate them for fraudulent use. AI allows fraudsters to swiftly experiment with various combinations of stolen credit card numbers and their corresponding security codes across many websites, evading detection by conventional security measures.

Identity Theft and Account Takeover
Through the analysis of breached data, AI algorithms can compile comprehensive profiles for identity theft, targeting people based on wealth and vulnerability. This advanced capability sets the stage for swift, automated account takeovers. AI employs sophisticated techniques to automate the process of cracking security answers and passwords, using a blend of pattern recognition and brute force methods.

This approach allows AI systems to rapidly decipher the right combinations of personal information, essentially guessing security answers and passwords with an efficiency that hackers could not achieve on their own. Through these means, AI streamlines the process of unauthorized access and also significantly lowers the time and effort required for successful account takeovers.

Deepfake Technology
Powered by advanced AI, deepfakes introduce an unprecedented threat of impersonation, blurring the lines between reality and fabrication in audio and video content. This technology leverages sophisticated machine learning and artificial neural networks to analyze and replicate the facial expressions, voice patterns, and mannerisms of individuals with astonishing accuracy. Deepfakes can be quite convincing. A deepfake video of superstar Taylor Swift promoting a cookware giveaway looked real enough that some fans were tricked out of money by the scam.

The implications of this technology are far-reaching. For example, a deepfake could depict a company’s CEO issuing fraudulent instructions for fund transfers, making statements that could affect stock prices, or leaking sensitive information, all of which can lead to significant financial and reputational damage.

Data Manipulation
AI can manipulate data by subtly altering financial records or operational data over time (such as invoices and financial statements), leading to significant losses. This form of manipulation is often gradual, making it difficult to detect through conventional auditing methods. AI-driven alterations are designed to evade standard detection techniques, necessitating the use of more advanced analytical tools.

Security Protocol Bypass
AI’s capability to mimic legitimate user behavior enables it to bypass security protocols without raising alarms, granting fraudsters access to secure data environments. Additionally, AI-enhanced social engineering tactics, such as spear-phishing attacks, have become more targeted. By analyzing employees’ online activities, fraudsters can create highly personalized and convincing fake requests for sensitive information, further emphasizing the need for comprehensive employee training.

Automated Hacking
AI-driven automated hacking can identify and exploit vulnerabilities at speeds and with a level of sophistication far beyond human capabilities. This includes finding and leveraging zero-day vulnerabilities – security flaws unknown to the software maker – before they can be patched. The rapid evolution of these AI systems necessitates equally advanced AI-powered security solutions capable of identifying and neutralizing threats in real time.

Best Practices for Protecting Your Business

Using AI-Enabled Security Tools
In the wrong hands, AI poses a significant threat to business security. However, when used by businesses themselves, it transforms into a powerful ally in enhancing security measures. Best practices for an effective defense strategy against AI-powered fraud involve keeping security protocols up-to-date and ensuring that employees are well-informed about potential threats. Continuous monitoring of transactions and network behavior, supported by AI-driven anomaly detection systems, plays a crucial role in identifying and responding to suspicious activities early on.

Training Employees
In addition to utilizing AI-enabled security tools, your business should invest in training programs for employees. These programs should simulate AI-driven social engineering attacks to heighten awareness among staff. By educating employees about potential threats and how to recognize them, businesses can mitigate the risk of falling victim to AI-powered fraud schemes.

Enhancing Verification Processes
Implementing robust verification processes, such as multifactor authentication and advanced biometric verification, can significantly reduce the risk of AI-driven identity theft and account takeovers.

Engaging in dialogue with financial institutions and partnering with cybersecurity firms that specialize in combating AI threats can offer valuable insights and solutions tailored to the unique vulnerabilities that businesses face. By the same token, participation in industry seminars and workshops dedicated to AI fraud prevention is valuable for networking and learning about cutting-edge defensive technologies and approaches as well as building a sense of shared community.

We’re Here to Help
The rise of AI-enabled business fraud represents a significant challenge, which means a proactive and informed approach to security is essential. By understanding the types of AI-enabled fraud, adopting advanced security measures, and maintaining a culture of vigilance, businesses can better protect themselves against these sophisticated threats. Continuous adaptation and education in the face of evolving AI technologies are crucial for staying one step ahead of fraudsters. For help securing your business accounts, reach out to your business banker.