Deepfakes: the next frontier of financial fraud (05/2024)
The fight against fraud has met a formidable opponent in AI, which is responsible for the increasing sophistication of deepfake technology and its many implications for wrongdoing and abuse. With deepfake technology evolving so quickly, how can identity verification programs keep up?
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What is a deepfake?
A deepfake is content - usually audio or video - that depicts people doing things by mimicking their voice or facial expressions. Deepfakes are very convincing, and are therefore able to trick those who interact with the content into believing that what they are seeing or hearing is real. These deepfakes are created using algorithms and machine learning that detect and study facial features and manipulate them to generate composites that look like someone but are actually not.
Deepfakes are incredibly dangerous, because any time someone can be convincingly impersonated online, the potential for malicious abuse is great. The tools needed to create deepfakes are inexpensive and widely accessible, allowing bad actors to easily exploit them for an endless variety of nefarious purposes.
Deepfakes and financial fraud
Deepfake scams are driving a new wave of financial fraud, usually in the form of new financial account openings, account takeovers, phishing, impersonation (which can lead to the indulging of secret or sensitive information) and the creation of fake identities.
Deepfake fraudsters can use videos to impersonate account holders to issue wire transfers, authorize transactions or gain password or account information. They can also impersonate bank officials or corporate executives in order to issue fraudulent transfer instructions. The possibilities are nearly endless, and the potential damages for financial institutions can stretch into the millions of dollars.
According to Regular Forensics, over a third of companies will experience deepfake voice fraud, and 29% will be taken in by deepfake video fraud. And this is all happening with alarming speed. Deepfake attacks using face swap technology to bypass remote identity verification alone increased by 704% in 2023, according to SC Media.
Deepfakes are incredibly difficult to identify and expose, because they are extremely realistic and people are easily tricked by them. The technology keeps getting better, too, so its very hard to keep up with and detect new developments and capabilities in deeptake production. Also, there is no federal law that specifically bans deepfakes. According to TechCrunch, The FTC would like to expand its impersonation rule to cover the impersonation of individuals, not just companies or government agencies. The agency may also criminalize goods and services used to hard consumers through impersonation via the creation of deepfakes.
Lets also not forget how incredibly accurate it is for AI to now create images of fake IDs that pass online identity verification. Now fraudsters are paying $15 for a fake ID and using simple desktop software to pass biometric selfie comparison tests..
How to combat deepfake fraud
Deepfake fraud is really hard to combat, especially if people rely on only one method - humans or software - to do it. Neither method is failsafe. Humans and software can both be duped, and both have limited abilities to detect fakes. The most effective way to combat deepfakes is a layered approach that combines human judgment with a biometric platform, including
- inject randomness into an interaction in real time - think of someone on camera who is asked to perform something completely unexpected.
- A trust platform that needs to offer additional safeguards to confirm peoples identity and therefore signal potential deepfakes.
Summary
Experts agree that relying on a single method of identity verification is not sufficient. Biometric Update warns: "Only the combination of authenticity checks, support for electronic documents verification, cross-validation of personal data and ability to re-verify data on the server side can protect you from fraud and address zero-trust-to-mobile issues."
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