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News   May 3, 2024   by Adam Malik

Biz leaders concerned about AI-generated scams

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Canadian executives are losing sleep over the burgeoning threat of AI-generated deepfake scams, a new survey revealed.

The research from KPMG in Canada included 300 organizations that have experienced fraud and showed that 95 per cent of leaders are highly concerned that deepfake technology has escalated the risk of fraud. Additionally, 91 per cent fear generative AI could further enable criminals to execute corporate misinformation and disinformation campaigns.

The study also found that about one-third of these organizations have been targets of such campaigns, highlighting the growing challenge of external fraud.

“As fraudsters are becoming increasingly sophisticated in their attack methods, it’s more and more challenging to deter criminals,” said Enzo Carlucci, national forensic leader at KPMG in Canada. “Organizations need to find new ways to strengthen their anti-fraud programs and stay one step ahead of scammers, or else they could be facing increased financial, legal, regulatory and reputational risks.

Survey highlights reveal that a vast majority of victimized companies acknowledge the augmented risk of fraud due to generative AI and deepfakes. Moreover, current economic conditions are feared to potentially drive employees or customers towards committing fraud. The transition to remote work is believed to have increased fraud risk, mainly due to reduced oversight.

The poll revealed that 43 per cent of companies currently experience internal fraud, such as embezzlement or data theft, while one-third face external threats like payment fraud or cyberattacks. Most notably, companies reported losing up to 5 per cent of their profits to fraud over the last year.

Carlucci pointed out that fraud tends to rise during economic downturns, which may push some individuals to commit fraud out of desperation, especially when working remotely. He stressed that the prevailing economic challenges make the cost of fraud particularly high for companies striving to remain profitable.

According to the survey, the most prevalent external fraud schemes involve fabricated information, often enabled by technological advancements. The leading scams include payment fraud, misinformation campaigns, and synthetic identity fraud. Internally, companies face issues like embezzlement and the misuse of personally identifiable information.

“In the current economic environment, many companies are struggling to stay profitable, so any profits that are lost to fraud is too much,” Carlucci said.

Despite these challenges, 77 per cent of companies claim to have fraud detection programs, but only 39 per cent consider them extremely effective. Similarly, while over half have fraud prevention programs, less than 40 per cent rate their anti-fraud policies and financial controls as extremely effective.

In response, nearly half of the respondents are turning to emerging technologies like AI and advanced data analytics to combat fraud. Marilyn Abate, a partner in KPMG’s forensic and financial crimes practice, urged companies to harness AI technologies to counteract fraudulent activities effectively.

“Companies need to use AI to fight AI. These tools are fast-becoming essentials in the fraud toolkit to prevent fraudsters from gaining the upper hand,” she said. “But if you don’t perform regular fraud risk assessments to identify external and internal risks and vulnerabilities, you will always be at a disadvantage.”

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