Deloitte, a global leader in professional services, predicts that losses from AI-enabled fraud could soar to $40 billion in the United States by 2027, marking a significant rise from the $12.3 billion reported in 2023.
This escalation represents a compound annual growth rate of 32%, highlighting the growing challenge in combating technologically advanced fraud.
Rise in AI-enabled fraud tools
The projection by Deloitte’s Center for Financial Services underscores a worrying trend fueled by the proliferation of sophisticated AI tools. Criminals increasingly exploit these tools to orchestrate fraud against financial institutions and individuals.
Deloitte indicates that there could be a less drastic yet substantial increase to $22 billion, but even this lower estimate underscores a significant concern in the finance sector.
The firm points to a burgeoning market of easily accessible fraudulent software as a critical driver of this trend. “Scamming software, ranging from as little as $20 to thousands of dollars, is now prolific across the dark web,” Deloitte’s report noted. This accessibility makes many anti-fraud measures less effective, as the technology democratizes capabilities previously only available to sophisticated operators.
Crypto fraud and deepfake concerns
The use of AI is not just limited to traditional fraud schemes but extends to more complex crypto-related frauds. For instance, a notable fraud involved a deepfake AI “gang” that successfully extracted $11 million from an OKX crypto exchange account by fooling the platform’s facial recognition systems. Star Xu, the founder of OKX, commented on the incident in a discussion with Cointelegraph Magazine, highlighting AI’s innovative yet malicious use in cybercrimes.
Strengthening defenses against AI frauds
Deloitte advises financial service providers to overhaul their defensive strategies. The firm recommends a robust investment in AI-based defense mechanisms and continuous threat detection and alert systems updates. “There is no single solution that can fully address the range of AI-enabled fraud risks,” Deloitte stated, stressing the importance of ongoing adaptation and learning for anti-fraud teams. Moreover, Deloitte suggests financial institutions should consider partnerships with third-party technology providers outside the banking sector.
These collaborations can bring fresh perspectives and technologies to the fight against fraud, particularly in enhancing biometric and digital identity verification tools. Institutions like JP Morgan and Mastercard are already pioneering the development of AI-driven defenses to safeguard against the sophisticated threats posed by AI-enabled fraud. By integrating these advanced solutions, financial service providers can better protect themselves and their clients from the increasingly complex landscape of digital fraud, ensuring security in an era dominated by rapid technological advancements.