Deepfakes are synthetically produced false pictures, sounds, and videos that are so realistic that they may fool people and companies, resulting in significant losses on a personal, financial, and professional level.
Cybercriminals exploit deepfakes to impersonate executives, manipulate stock markets, and deceive financial institutions. For instance, in 2019, a UK-based energy firm was defrauded when criminals used an AI-generated voice clone of the CEO to instruct a subordinate to wire €220,000 to a supplier account, which was later found to be fraudulent.
The attackers mimicked the CEO’s German accent and voice inflections, making the request sound authentic. In 2020, one such attack involved a deepfake voice used to impersonate a company CEO, tricking a manager into transferring $35 million to a fraudulent account.
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CEO Impersonation Fraud
A rare instance of CEO fraud reportedly duped a UK-based energy firm out of US$243,000 using deepfake audio, which is an artificial intelligence (AI) generated audio. According to a report in The Wall Street Journal, the scammers imitated the voice of the CEO of the firm’s parent company, situated in Germany, using speech-generating AI software in order to carry out an illicit money transfer. Posing as the CEO of the parent firm, the hackers called the CEO of the UK company.
The CEO of the UK firm was promised payment, and the attackers asked that an immediate wire transfer be made to a supplier located in Hungary. Following the transfer, the funds were routed to an account in Mexico and subsequently other places, which made it more challenging to identify the scammers. The scammers later called the company again, claiming the initial payment had already been made, and requested another transfer.
The CEO of the UK firm declined when he noticed the payment had not gone through. The scammers again tried to demand a follow-up payment on the third call. This incident highlights how, using a recent malware called “deepfake audio fraud,” hackers can misuse AI to create schemes that are more difficult to identify.
Stock Market Manipulation
Deepfakes are synthetically produced pictures, audios, and videos that are so realistic that they may fool people and companies, resulting in significant losses on a personal, financial, and professional level. This is also true in the stock market, where a large number of gullible people who are not aware of deepfake technology are becoming victims of these frauds.
For example, a popular stock market website recorded an event on November 22, 2023, in which a customer narrowly escaped a fraud that could have costed them Rs 1.80 lakh. The company’s CEO cautioned that the proliferation of AI-powered applications that can produce deepfakes is causing an increase in these fraudulent activities.
Regretfully, not everyone has been able to stay away from these frauds. A Hong Kong-based bank manager lost $35 million in a similar event in 2020 as a result of a very convincing deepfake call. Using deepfake audio technology, the attackers pretended to be the director of a company that the manager knew and called, asking for a sizable transfer of money for a business purchase.
The manager followed orders and transferred more than $35 million to fictitious accounts because the voice sounded almost identical to that of the real CEO.
Synthetic Identity Fraud
When real information is combined with false information to create a new synthetic identity, this is known as synthetic identity fraud. Due to its plausible appearance, this fake identity may be used to create accounts, make phone transactions, and more. One of the types of identity theft that is expanding the quickest is synthetic identity fraud. According to the Security Magazine, synthetic identity fraud affected 46% of organizations, in 2022.
- With over 50% reporting an increase in business fraud and over ⅔ reporting an increase in consumer fraud, fraud is on the rise for banks, fintechs, and credit unions.
- More fraud attacks and losses are being caused by increasingly complex fraud efforts. Banks are expected to lose $40 billion by 2027 because of advancements in Gen AI.
The McKinsey Institute reports that synthetic identity fraud is a financial crime with the greatest rate of growth in the US and is also becoming more prevalent globally. In fact, at the moment, 85% of all frauds are synthetic identity frauds. By assembling pieces of a victim’s personal information and fusing them with fictitious identifiers, scammers fabricate new identities in this kind of fraud.
In essence, they construct a new identity by adding false information to fragments of authentic data. Since the goal of synthetic identity fraud is to fabricate a victim who does not exist in reality, organizations are finding it difficult to stop it.
The car loan sector is the most frequently targeted by synthetic identity fraudsters, which resulted in a 98% rise in efforts and an astounding $7.9 billion in losses for the sector in 2023. According to Point Predictive’s analysis of 180 million loan applications, approximately 75% of the dangers that car lenders face are related to credit cleaning, synthetic identities, and income and employment fraud.
