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Experian: Fraudsters will Leverage AI Tools to Access Consumer Accounts in 2024

Fraudsters have their eyes on your online bank account. And they might use generative artificial intelligence (AI) tools to convince you to turn over your credentials to access it.

That’s one of the main trends highlighted in Experian’s 2024 Future of Fraud forecast, which was published this week and builds off previous Experian research that surveyed 2,000 U.S. consumers and 200-plus businesses in North America. Experian found that nearly 70 percent of businesses reported fraud loss increases in recent years and more than half of consumers feel they’re more of a fraud target than a year ago.

This feeling is legitimate since consumers reported losing at least $8.8 billion to fraudsters in 2022—a 30 percent increase from 2021, according to the U.S. Federal Trade Commission. The trend continued in 2023, with at least one-third of U.S. businesses reporting fraud events in the following areas during the year:

  • Authorized Push or Wire Transfer Payment (APP Fraud) – 41 percent
    • A fraudster deceives a consumer, who willingly deposits funds into an account controlled by the fraudster. Typically used for investment scams, impersonation scams, romance scams, and more.

  • Transactional Payment Fraud – 38 percent
    • Typically when a fraudster steals a consumers credit card or bank account information to then complete an illegal transaction.

  • Account Takeover (ATO) – 33 percent
    • When a fraudster takes over a consumer’s online account—including bank, email, or social media account—without the consumer’s permission.

  • First Party Fraud – 33 percent
    • A fraudster mis-represents themselves to gain an advantage, such as overstating their salary to take out a loan from a bank.

  • Identity Theft – 33 percent
    • A fraudster uses a consumer’s personal or financial information without the consumer’s permission.

  • Synthetic Identity Fraud – 33 percent
    • Fraudsters take real consumer’s information—such as a Social Security number and birthdate—and combine it with false information, such as an address and telephone number, to build a new identity.

Helping drive this activity is the rise of generative AI to make fraud more accessible. Just like the “do-it-yourself” craze in home improvement, fraudsters can now leverage AI tools to create deepfake content—emails, voice and videos, and scam websites—to perpetuate their online attacks, Experian assessed. Fraudsters may also use these content builders to craft “proof of life schemes.”

“Using stolen identities, fraudsters will leverage generative AI to create fake identities on social media,” according to Experian. “They can then interact online with these new profiles that look like a real consumer. This could dramatically increase the number of fraud attacks.”

Other fraud trends include scammers diving into cause-related and investment deception. For instance, creating a fake GoFundMe campaign that emotionally connects with potential targets to persuade them to give the fraudster money. AARP detailed one instance of this tactic, where fraudsters used a story about a homeless veteran to raise more than $400,000 before being detected.

Experian also predicts that in 2024, we’ll see a rise in synthetic identity fraud after a period where many fraudsters allowed these identities to go dormant while continuing to build a history.

“Experian predicts this will make it easier to elude detection—leading fraudsters using those dormant accounts to ‘bust out’ and steal funds over the next year,” according to the report. “Businesses will need to collaborate more closely than ever with their fraud-prevention partners to review their current portfolios for synthetic identity accounts.”

How are consumers responding to this rising threat of fraud? They’re going back to in-person banking, for one. Experian found that consumers are opting to go to a bank branch in person to open new accounts or obtain financial advice because they feel that it is safer and they will avoid online security risks.

Eighty-five percent of consumers also reported that physical biometrics were the most trusted and secure authentication method they’ve encountered. Experian anticipates that more businesses will add these measures in 2024 since currently only 32 percent of businesses reported using these methods to detect and protect against fraud.

U.S. businesses will need to invest in layered security approaches to fraud that detect and respond to that activity, without hindering legitimate customers.

“This will necessitate targeted investments in Machine Learning (ML) driven technologies that can significantly improve online security and customer experiences as well as prioritization of the security technologies that consumers trust most—namely, physical and behavioral biometrics,” according to the Experian report.

Sixty percent of businesses are planning to increase their investment in ML capabilities for fraud prevention due to its ability to identify known and unknown trends in large data sets, analyze large data sets quickly, and extend fraud prevention measures across businesses’ entire customer portfolio.

“For those businesses currently using ML models, 90 percent reported a high level of confidence in their effectiveness at fraud detection and prevention, and 87 percent reported high levels of confidence at customer authentication,” Experian found.

Experian’s analysis mirrors findings from the Associated Certified Fraud Examiners’ (ACFEs’) Anti-Fraud Technology Benchmarking Report, which was also released this week. The report is the analysis based on a survey answered by 1,187 ACFE members in October 2023.

ACFE found that anti-fraud programs are likely to triple their use of AI and ML in the next two years, with 83 percent of organizations anticipating implementing generative AI as part of their anti-fraud prevention programs.

The association also reported that anti-fraud programs are increasingly using biometrics (40 percent in 2024, compared to 26 percent in 2019) and robotics (20 percent in 2024, compared to 9 percent in 2019) as part of their anti-fraud programs.

“In 2024, using technology as part of an anti-fraud program is a necessity,” according to the ACFE report. “Fraud perpetrators continually seek ways to exploit technological developments and human weaknesses to accomplish their schemes. Organizations must employ the most effective tools to guard against these threats, and that often means implementing new programs and training staff to effectively use them.”