GenAI and Fraud

Generative Artificial Intelligence (GenAI) is a category of AI capable of producing new content, including audio, code, images, text, and videos. Unlike traditional AI systems, which are task-specific, GenAI can create original content semi-autonomously through user inputs and prompts. While GenAI’s creative capabilities are becoming integrated into everyday applications, they also present significant risks. Fraudsters use GenAI to create fake accounts, emails, or phone calls, mimicking the voice and mannerisms of real individuals to execute sophisticated phishing and social engineering schemes.

The GenAI and fraud detection market is growing rapidly. Solution providers use AI to enhance fraud detection and prevention strategies by analyzing data patterns and creating synthetic samples replicating real-life fraud scenarios. This approach helps in preparing for new fraudulent methods. For example, GenAI can simulate payment sequences mimicking fraudulent card transactions, improving the performance of fraud detection tools.

Since Q4 2022, malicious phishing emails have increased by 1,265%, highlighting the escalating threat landscape.

GenAI’s impact on fraud detection is dual-faceted: it enhances the capabilities of both fraudsters and solution providers. ChatGPT and FraudGPT are being leveraged to create malicious code, generate malware, and design phishing pages. Vendors are adopting GenAI alongside AI/ML capabilities to combat these threats for enhanced detection. The market is expected to expand significantly as organizations invest more in AI for fraud prevention.

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