Outsmarting Con Artists: How to Identify and Navigate AI Scams

The explosion of the use of artificial intelligence (AI) places this technology at the forefront of protecting financial integrity and personal security. However, it also poses threats. It adds layers of potential for sophisticated AI scams within financial institutions and our personal lives that people must recognize. Understanding the dual purpose AI plays in these areas is crucial in navigating this exciting and complex landscape.

But before we scare you with various ways con artists and criminals conduct AI scams, let’s discuss AI’s valuable role in the world.

The Helpful Role of AI in the Financial and Investment Industry

Some of the best use cases for AI are in the financial and investment industry. Artificial intelligence systems assist in trading, risk management, personalized financial planning, fraud detection and prevention, regulatory compliance, and more.

AI algorithms and software can assimilate massive amounts of data including market trends and sentiment, historical data, and economic indicators in real time—faster than any human.

Implementing these technologies has proven invaluable to professionals in offering expedient and exceptional services to their clients.

The abilities of AI include, but are not limited to:

      • Conducting predictive analysis to determine the best times to A person in the shadows at a laptop plotting his next next AI scams.execute trades.
      • Analyzing market trends and asset performance to assist with asset allocation and portfolio diversity.
      • Comparing historical data to current trends to identify investment prices and opportunities.
      • Evaluating economic indicators and market conditions to compare with historical data to predict potential market downturns and construct tactics to mitigate risks.
      • Analyzing large data sets of transaction patterns to detect anomalies and variances that suggest fraudulent activities.

AI Scams to Be Aware of and Avoid

As helpful as artificial intelligence is for the financial sector and other industries, the technology has a dark side. AI scams are rampant in the business world and in our personal lives. From creating false information to trade manipulation to deepfakes, artificial intelligence tools present countless high-level opportunities for fraudsters.

Popular examples of AI Scams include, but are certainly not limited to:

AI Voice Scams

AI voice scams are included in a fraudulent category called deepfakes. Deepfakes encompass audio and video impersonations of business professionals, celebrities, and even your friends and family. Using AI-generated voice deepfakes, con artists create imitations of a person’s voice and call unsuspecting individuals to request money for an emergency or financial information, as well as other sensitive data you wouldn’t usually pass along over the phone. Imagine receiving a call at midnight from your “daughter” who is in a jam and asks you to Venmo or wire her funds immediately or to provide other info to help her—and in a panic, you provide it, but it turns out not to be her.

A smart practice to prevent falling victim of voice scams is establishing code words with family members to provide in emergency calls. Additionally, try contacting the person on a trusted phone number or via text to verify the emergency call is from them. If no code word is provided or you cannot reach the person to confirm their identity, ask specific questions of the suspicious caller that only the real person would know the answers to. If you remain suspicious, end the call and intensify your efforts to reach the real person to ensure they are safe, which will confirm the call was an AI voice scam.

Email Phishing Attacks

This fraudulent strategy is not new, but AI technology enables more sophisticated layers that con artists use. Phishing includes fake messages, texts, and emails that AI technology personalizes using information collected from online data and social media profiles. The messages appear to come from financial institutions like your mortgage company or bank or streaming platforms like Netflix. Emails look so real and even include logos of businesses you recognize. The goal is to dupe individuals into revealing unique personal and sensitive financial details, which are then used by the crook to steal funds, your identity, and more.

To avoid becoming a victim of a phishing attack, don’t click links in an email or text or respond to an email or text with any information. Instead, pick up the phone and contact the business to confirm the validity of the communication. Provide the requested information over the phone. Don’t use phone numbers or email addresses provided in the suspect communication.

Investment Scams

To facilitate investment scams, artificial intelligence is used to create bogus investment platforms that look exactly like legitimate ones. You may think you’re opening an account with a credible platform that looks like a highly recognizable brand, but it’s not. Other platforms are created to seem as legitimate as the more well-known names, with the same offerings, potential returns, and “credentials.” These fake platforms attract unsuspecting investors, take their money, and disappear.

The best way to prevent investing with a fake platform is to confirm the investment platform’s legitimacy. Pick up the phone and call the institution to verify their website address, platform name, and cell phone app, if applicable. Confirm appropriate registration with regulatory authorities that govern the investing industry, such as the Securities and Exchange Commission (SEC). Research reviews and worthy articles regarding the platform you’re considering. Practice a skeptical mindset and avoid falling prey to promises of high returns and low risk. And if pressure to invest quickly becomes a theme—slow down and double down on your due diligence before you invest.

Trade Manipulation

Trade manipulation is yet another sophisticated ploy that AI technology can significantly enhance. Here, algorithms are specifically designed to manipulate the prices of stock by initiating massive trades within short timeframes. This activity manipulates stock market signals, creating false indicators of false inflation or deflation of stock prices.

Avoid trade manipulation tactics by researching brokers and their registrations with appropriate regulatory authorities. Use only reputable trading platforms that employ vigorous security and encryption methods, such as two-factor authentication, that protect your information and prevent data breaches. Keep abreast of current stock market news from reliable sources. Beware of red flags, such as sudden spikes or drops in stock prices. And don’t follow trading trends because “everyone else” is. Scammers could have created that “trend” as a deliberate, fake manipulation to encourage investors to make sudden moves they should not.

Fake Reviews and Misinformation

AI is often used to create fake reviews and fake news to sway public opinions in one direction or another. This misinformation and manipulation is used for investment scams, to sully the reputations of businesses, public figures, and private individuals. It spreads political misinformation, creates fake news, scare tactics, and more. False information influences everything from stock prices and investment decisions to political opinions and election results to simply ruining the lives of undeserving individuals and businesses.

Prevent becoming a victim or participant of misinformation by performing exhaustive research on topics before forming an opinion. Don’t believe everything you read. Ask questions and seek advice from professionals or other knowledgeable individuals who know more than you do about the subject. Above all, keep an open mind and be aware of the prevalence of fake reviews and misinformation. If you detect red flags, seek more knowledge and understanding before you judge people or make decisions such as investments.

Final Thoughts on AI Scams and How You Can Avoid Becoming a Victim

The above examples are just a few ways con artists put AI technology to use for criminal purposes. Spotting scams is challenging, even for the most seasoned investors and savviest individuals. The arrival of AI in all aspects of our lives makes the task even more daunting. Whether you are a beginner or sophisticated investor or a person simply living life, no one is immune to AI scams. The ways con artists can use this technology to propel their criminal activities to the next level makes everyone vulnerable. We must stay informed and practice smart strategies to identify and avoid fraud, as well as misinformation that can lead us down the wrong path.

Additional resources:

Tips to Spot Investment Scams and Identify Potential Fraud

Artificial Intelligence (AI) and Investment Fraud: Investor Alert

About Scott Maurer

Scott Maurer, Vice President of Sales for Advanta IRA, is a recognized expert in the field of self-directed IRAs. With a law degree from the University of Florida and as a designated Certified IRA Services Professional (CISP), Scott’s keen understanding of rules and regulations fuels his passion to educate others on the power of investing in alternative assets using self-directed IRAs. Scott is a frequent guest on retirement and investing webinars and podcasts, and he has shown thousands of individuals how to achieve financial freedom by teaching them how to use their retirement funds to invest in private placements, real estate, private lending, and more. Throughout his two decades in the industry, he has watched numerous unique investments unfold, giving him great perspective of what is possible when people take control of their retirement funds and investing decisions.