Written by Paul Ellis at Medius
As online fraud doubled in 2023 it continues to pose a significant threat in an already challenging business environment. With 2023 seeing the highest number of insolvencies in the UK in thirty years, experts have been highlighting the transformative role of Generative AI in empowering cyber-criminals to evolve into sophisticated attackers.
Deepfakes, digitally manipulated media replacing one person’s likeness, have become a dangerous method fraudsters are using to enhance their scams. Aided by readily-available AI tools, deepfakes are becoming increasingly easier to create, even for less digitally advanced scammers, and harder to spot.
A recent case of a deepfake AI-enhanced scam demonstrated just how dangerous deepfakes are to businesses. After initially receiving a suspicious phishing email, an employee’s fears were allayed after a video call with the CFO and other colleagues he recognized. As it turns out, everyone on the call was deepfaked. It was only after he checked with the head office that he discovered the deceit. But by then he’d transferred $26 million.
This shocking example of AI-assisted fraud shows just how hard it’s becoming to keep businesses safe.
Not all scams will cost businesses $26 million but fraud threatens all businesses. According to our latest research, the average business loses approximately £300,000 every year. Yet, finance teams find these losses hard to quantify. In fact, a quarter (25%) of finance executives are unaware of the impact of invoice fraud on their operations. Poor visibility into cash flow leaves businesses vulnerable, allowing fraudulent actors to exploit funds unnoticed.
As AI continues to become more accessible, a wider range of scammers will be able to launch highly convincing attacks at scale. It’s time for businesses to fight fire with fire and use AI against criminals to strengthen their defences.
Rising AI-enhanced attacks
Half of business leaders (48%) believe that the increased use of artificial intelligence will lead to an increase in financial fraud. And they are likely to be proven correct.
Fraudsters are using AI to generate complex scams, such as deepfaked images, videos and audios to make scams appear more authentic and harder to distinguish as fake.
AI has also aided fraudsters in broadening their reach, by helping them to produce the code needed for mass attacks, which are more sophisticated and reach a wider range of potential victims. For example, the emergence of tools like ‘Fraud GPT’ on the dark web has led to a 135% increase in phishing emails, enabling fraudsters to craft deceptive emails at scale, making it harder for businesses to distinguish between genuine and fake communications.
One AI-enhanced scam that is rapidly becoming more common, is the Business Email Compromise (BEC) impersonation scam. This scam, aided by AI, sends targeted accurate emails, with convincing details to access confidential business information, or trick the victim into sending funds. 74% of UK adults have been targeted by these fraudulent emails, and with scam emails becoming harder to identify the number of victims will only rise.
Strengthening Frontline Defenses Against Fraud
Accounts Payable (AP) is a significant, yet neglected vulnerability within businesses when it comes to cyber breaches. Updating AP software can play a key role in the operational security of a business. Modernising AP ensures that more dependable systems are in place to ensure financial security through automated business payment processes, and error detection programs preventing irregular transactions.
Automation done correctly can help businesses in validating important vendor data, anomaly detection and importantly create much needed visibility in end-to-end cash flow management. Financial workers handling large volumes of invoices and financial information can be notified of issues quickly, and importantly, before the fraud has taken place.
Fraud detection algorithms power the ability for businesses to spot fraud before it occurs, and build a risk management structure within a business that prevents internal and external fraud. At Medius, our Fraud and Risk Detection Solution uses AI to spot duplicate payments, or fake invoices and alerts financial teams to the potential fraud risk.
Incorporating AI into AP
When assessing the role of AI in financial operations, businesses must be able to recognise how the technology can hold a remedy to the pains of financial fraud. Businesses, technology providers, and regulators need to make AI their strength if they are to combat fraudsters.
Prioritising solutions like automated AP software becomes imperative for businesses seeking to shield themselves from the rising tide of AI-enabled fraud. As fraudsters strengthen their attacks with AI, businesses must be prepared to harness AI innovation for their protection.
