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GenAI is reshaping the landscape of financial fraud this 2024 holiday season. With 62% of people worried about becoming victims of cybercrime this holiday season and 59% specifically concerned about falling prey to complex AI holiday shopping scams, the stakes are higher than ever. As fraudsters harness the power of GenAI, consumers face sophisticated threats ranging from pig butchering scams and holiday travel scams to like-farming scams and overpayment scams. These evolving threats exploit readily accessible technology to deceive at scale, creating something during the busiest shopping season of the year. In this blog, we explore six GenAI-powered scams positioned to dampen holiday spirits in 2024 and discuss actionable strategies financial services organizations (FSOs) can employ to protect their customers, build trust, and demonstrate industry leadership in combating fraud. By staying ahead of these emerging threats, FSOs can turn the holiday season into an opportunity to empower and educate their customers against evolving risks. Top 6 GenAI-Powered 2024 Holiday Scams
Scams involving AI cost Americans over US$108 million this year, doubling since 2023. Per a recent Authority Hacker report, almost half of these scams led to financial losses averaging US$14,600.00, representing a significant increase over the approximately 25% of fraud scams that resulted in financial losses last year. GenAI democratization has drastically impacted the velocity, complexity, and delivery of financial scams, enabling bad actors to easily access the tools needed to cast a wider net, and diversify and scale operations. Around 48% of Americans will do the majority of their holiday shopping between Black Friday and Cyber Monday, making this holiday season one of the busiest for U.S. consumers and financial scammers. Of the 43% of American consumers who report being victims of a scam while holiday shopping online, 30% indicate the scam occurred on Black Friday, 11% on Cyber Monday, and 30% on Christmas. This 2024 holiday season, the top six GenAI-driven scams include: #1 Pig butchering scams The FBI indicated approximately 40,000 victims reported over US$3.5 billion in losses related to pig butchering in 2023. Pig butchering scams have evolved into highly sophisticated fraud tactics due to GenAI and other technologies, especially during the holiday season when consumers are more vulnerable to enticing financial opportunities. This social engineering scam involves a bad actor taking the time to “fatten up” their victims by building trust and cultivating relationships through convincing conversations, often via social media, messaging apps, or dating platforms. Leveraging GenAI, scammers can produce hyper-personalized messages that mimic human interaction, fabricate fake documents, generate synthetic voice calls or video messages, and nurture emotional rapport, making it extremely difficult to detect the deceitful nature of these interactions. During the holidays, scammers may further personalize their schemes to take advantage of holiday goodwill, urgent financial needs, or enticing investment opportunities that promise quick returns to help with holiday expenses. #2 Malvertising scams Malvertising, or malicious advertising, saw a steep increase during the 2023 holiday season, with malvertising attacks rising by 53% and adware incidents by 227%. The proliferation of holiday advertising is a prime opportunity for fraudsters, as consumers search for and are enticed by deals, promotions, and holiday-themed sales. Scammers can utilize GenAI to create highly realistic and tailored advertisements that can replicate the branding, language, and promotional style of legitimate companies. GenAI-driven malvertising campaigns can seamlessly deploy fake ads that redirect unsuspecting users to malignant websites designed to steal sensitive data, install malware, or commit phishing attacks. Shoppers are more incentivized to click on too-good-to-be-true offers during the holiday rush, and dynamic content adaptation can enhance the credibility and relevance of malicious ads. #3 Credit card scams Around 52 million Americans (60% of US credit card holders) experienced credit card fraud in 2023, with fraudulent purchases surpassing US$5 billion. During the holidays, over 74% of consumers intend to shop using their credit card, with spending anticipated to increase between Nov. 1 and Dec. 31 to a record-breaking US$989 billion. Transaction volumes rise during the rush of online and in-store shopping, creating ample opportunities for fraud. Leveraging GenAI, scammers can create convincing fake alerts, emails, and SMS messages that appear to come from trusted retailers, banks, or even fraud detection services. These messages frequently prompt victims to verify suspicious charges, disclose sensitive account information, or click on malignant links. Common credit card scams, including phishing schemes, fake delivery scams, and gift card scams, can be tailored using GenAI capabilities that incorporate a victim’s name, past purchase behavior, or even specific holiday promotions from well-known retailers. The credit card decline trend is a new scam involving an initial credit card being declined when a consumer is attempting to make a purchase. When the consumer provides a second credit card instead, the consumer is then charged for a purchase on both cards. #4 Holiday vacation booking and rental scams Predictably, holiday travel scams are a recurring fraud theme each year. However, GenAI has sparked a remarkable 900% spike in travel scams per a recent Booking.com report. Booking and rental scams are rampant as people seek to celebrate the holidays in popular vacation destinations or with loved ones. Airbnb and Booking.com are often targeted by fraudsters because these websites enable people to list their own homes and properties as vacation rentals. GenAI capabilities empower scammers to create elaborate, attractive rental properties on these types of trusted sites, including property pictures and descriptions, even though the property doesn’t exist. Once a consumer displays interest, the scammer attempts to communicate directly for payment to minimize traceability, cancel pre-existing bookings and prompt the consumer to rebook at a more expensive rate, or disappears completely after receiving payment. Fraudsters often will continue to nurture these scams for extended time periods depending on their success rate. With GenAI, any communication format can also be personalized per victim. #5 Clickbait scams Clickbait scams, also known as like-farming schemes, are an emerging holiday fraud typology that exploits the emotional state of holiday shoppers through engaging social media posts that often appear heartwarming or urgent. Fraudsters use GenAI to craft shareable content, ranging from touching holiday stories and fake charity appeals to seemingly genuine sales and giveaways, on platforms like Facebook. These posts circulate rapidly because they entice users to like, comment, and share to gain a broader reach. Beneath the surface lies a more sinister aim: spreading malware-laden links or coaxing users into exchanging sensitive information, such as social security numbers, under the guise of winning a prize or accessing an exclusive deal. By leveraging GenAI, scammers ensure these posts are adaptive, personalized, and highly persuasive, making them challenging to discern as fraudulent. #6 Overpayment scams Overpayment scams are a longstanding fraud typology that has transformed into more sophisticated tactics via GenAI. In these scams, fraudsters victimize sellers from digital auctions and classified ads. Pretending to be a buyer that accidentally sent a payment exceeding the agreed-upon amount for the goods or services, the scammer then requests a refund for the excess funds. By the time the victim processes the refund, the original payment turns out to be fraudulent, reverses, or from a compromised account. The victim is left to suffer the loss of the original purchase in addition to the returned fee. The sophistication of GenAI-driven overpayment scams is attributed to the hyperrealistic communication that mimics genuine buyer behavior, which may involve excuses such as the holiday rush confusion or system glitches. Scammers can further scale fraud efforts to guide multiple victims through the scam via automated targeting that reduces the need for human intervention. GenAI can also produce realistic-looking transaction records, receipts, or payment confirmations from legitimate payment platforms, or allow the scammer to make real-time adjustments through dynamic, contextually relevant responses if a potential victim displays hesitation. How FSOs Can Protect their Customers During the Holidays
GenAI-powered fraud and scam tactics impact businesses across all industries and countries. However, though the average loss for most companies in 2024 reached US$450,00, the financial services sector endured the greatest impact with losses surpassing US$603,000. Of all surveyed industries, the financial services sector was most impacted by AI-generated audio and deepfakes; 23% of surveyed FSOs reported over US$1 million in GenAI related fraud losses. Despite the challenges of combating GenAI-powered fraud and scams, FSOs do have a distinct advantage in earning the confidence of their customers. A significant majority of U.S. adults trust their banks over all other entities, such as the government and healthcare providers, in terms of securing their information. Almost 9 in 10 bank customers report that their bank is proactively safeguarding them against scams and fraud, with 75% believing their bank’s efforts are superior to other businesses' efforts to protect them. Additionally, consumers are well-aware of how advanced technologies, like AI, can help protect their bank accounts from scams. Almost 60% of scam victims indicate integrated fraud detection and monitoring technologies are critical to increasing customer fraud defenses. The financial services sector is a leader in fraud prevention initiatives and FSOs must continue adapting their anti-fraud measures to align with the complexity and pace of the global scam landscape. For example, one of the most important aspects of these initiatives is empowering customers to identify sophisticated scams before experiencing the potentially life-altering consequences of GenAI-driven fraud. Customer educational campaigns should be a top priority for FSOs this holiday season and moving into 2025 to nurture trust and facilitate awareness of changing GenAI-driven scams and fraud trends. These educational campaigns must extend to:
The Expanding Role of GenAI in FRAML
FSOs must increase investments in adaptive behavioral analytics, advanced fraud detection and monitoring technologies, and AI-driven threat intelligence systems as part of their strategy to counter emerging GenAI-powered scams. Leveraging tools like predictive analytics that proactively detect and flag suspicious activities and biometric authentication to thwart identity theft will help FSOs stay ahead of scammers. Despite its use in a growing range of scam tactics, GenAI is one of the most powerful tools in fraud management and anti-money laundering (FRAML) initiatives. GenAI-driven deepfake defenses are incipient approaches, often involving a strategic combination of video artifact analysis, spectral video analysis, and repetitive video background detection. Robust deepfake detection tools promote good device security hygiene by blocking jailbroken devices, for example, and can authenticate video and audio grabbing on a device. In behavioral biometrics, GenAI is used for forecasting attack patterns and detecting deepfakes. Many biometrics vendors are actively exploring integrated safeguards against deepfakes by integrating these capabilities in their core technology stack. In KYC, large language models (LLMs) can harness natural language processing to filter out anomalies in control lists (OFAC), potentially exposed persons (PEP) lists, and adverse media. Additionally, GenAI capabilities offer copilot functionality to augment investigators and streamline operational and regulatory reporting. GenAI-powered fraud risk-scoring model management introduces strategic automation, producing rule recommendations for risk-scoring models according to data such as consortium data, historical transactions, and investigator decisions. By pairing GenAI models against operational machine learning systems, data scientists can simulate complex and synthetic fraudulent behaviors that mirror real-world events. Utilizing generative adversarial networks (GANs), this novel adversarial approach sharpens the model’s detection and risk assessment capabilities, enhancing their ability to identify and counteract sophisticated fraud schemes. This process automates the development of realistic test cases and reduces the cost and complexity of model development. These technologies, combined with a layered security approach, ensure rapid response capabilities and continually evolving fraud prevention measures to match the sophistication of AI-driven threats. Reimagine Your Marketing Campaigns in an Evolving GenAI-Driven Fraud LandscapeOrange Bridge Marketing is a multiple-award winning B2B technology marketing and content writing agency. Our team deploys extensive experience in the financial services sector and draws on deep knowledge of the rapidly shifting global fraud environment, regulatory landscape, and emerging AI technologies to help FSOs create cutting-edge educational content. Ensure your stakeholders, employees, and customers understand the challenges they face in a GenAI-centric financial fraud landscape this holiday season and all year round with diverse, informative marketing content. The right marketing strategy and assets can help your FSO amplify awareness of the safeguards and solutions being deployed to help protect your customers and organization against sophisticated GenAI-driven scams. Whether you’re a FinTech, credit union, risk management firm, payments processor, or investment firm, Orange Bridge can augment your fraud education campaigns and drive industry leadership via powerful, integrated marketing content. Contact our team today to learn how we can help your financial services organization develop thought leadership-driven webcopy, digital brochures, ebooks, white papers, social media content, and other marketing material. |
