Deepfake Imposter Scams Are Driving a New Wave of Fraud

Nabila Ahmed, Adam Haigh, Ainsley Thomson and Ellie Harmsworth

Tue, August 22, 2023, 8:00 AM GMT+9·9 min read

Deepfake Imposter Scams Are Driving a New Wave of Fraud

(Bloomberg Markets) -- Computer-generated children’s voices so realistic they fool their own parents. Masks created with photos from social media that can penetrate a system protected by face ID. They sound like the stuff of science fiction, but these techniques are already available to criminals preying on everyday consumers.

Most Read from Bloomberg

The proliferation of scam tech has alarmed regulators, police and people at the highest levels of the financial industry. Artificial intelligence in particular is being used to “turbocharge” fraud, US Federal Trade Commission Chair Lina Khan warned in June, calling for increased vigilance from law enforcement.

Even before AI broke loose and became available to anyone with an internet connection, the world was struggling to contain an explosion in financial fraud. In the US alone, consumers lost almost $8.8 billion last year, up 44% from 2021, despite record investment in detection and prevention. Financial crime experts at major banks, including Wells Fargo & Co. and Deutsche Bank AG, say the fraud boom on the horizon is one of the biggest threats facing their industry. On top of paying the cost of fighting scams, the financial industry risks losing the faith of burned customers. “It’s an arms race,” says James Roberts, who heads up fraud management at Commonwealth Bank of Australia, the country’s biggest bank. “It would be a stretch to say that we’re winning.”

The history of scams is surely as old as the history of trade and business. One of the earliest known cases, more than 2,000 years ago, involved a Greek sea merchant who tried to sink his ship to get a fraudulent payout on an insurance policy. Look back through any newspaper archive and you’ll find countless attempts to part the gullible from their money. But the dark economy of fraud—just like the broader economy—has periodic bursts of destabilizing innovation. New tech lowers the cost of running a scam and lets the criminal reach a bigger pool of unprepared marks. Email introduced every computer user in the world to a cast of hard-up princes who needed help rescuing their lost fortunes. Crypto brought with it a blossoming of Ponzi schemes spread virally over social media.