Amid AI Renaissance, Consumers and Businesses Inundated with Fraud

More than two-thirds of U.S. consumers report an increase in spam and scams, as AI-enabled fraud fears mount and businesses ward off attacks from hacked accounts

Sift, the leader in Digital Trust & Safety, today released its Q2 2023 Digital Trust & Safety Index, which revealed that more than two-thirds (68%) of U.S. consumers have reported an increase in spam and scams since November, as generative AI tools have entered the consumer sphere and become popular among fraudsters. Likewise, nearly half (49%) of consumers admit it’s become more difficult to identify scams during the same period, and nearly one-in-five (19%) say they’ve been successfully phished.

The rash of AI-enhanced scams is creating downstream abuse that affects both consumers and businesses. Specifically, Sift has observed a surge of account takeover attacks, with the rate of ATO ballooning 427% during the first quarter of 2023 compared to all of 2022.

The increasing availability and marketability of fraud tools, including AI, has accelerated the democratization of fraud, effectively enabling anyone to defraud someone using stolen credentials or payment information. Sift researchers have been tracking the growth of one of these tools: automated social engineering scripts known as OTP (one-time password) bots, which have proliferated on openly available groups in the Telegram messaging app.

OTP bots work by spoofing a company or financial institution’s caller ID to trick victims into providing their OTPs for anything from bank logins to payment service apps. Fraudsters can pay for use of the bot on a daily, weekly, monthly, or yearly basis. And while many consumers won’t fall for these scams, the scalability of these bots create a profitable numbers game for fraudsters.

“Though still in its infancy, generative AI has already been a boon for fraudsters,” said Brittany Allen, Trust and Safety Architect at Sift. “Combined with the scale and availability of automated tools, online scams will soon be ubiquitous and frighteningly convincing, leading to incalculable losses for consumers and companies alike. Businesses, however, can both protect their customers and grow revenue by embracing AI and automation themselves to prevent fraud before it happens and reduce friction for legitimate users.”

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