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Cost estimates vary, but
better than one third of risk
professionals surveyed put the
average cost of a synthetic fraud
incident at between

$25,000 and $100,000.

AI-based attacks were and 84 percent were concerned
about frauds perpetrated using AI. These concerns
are not misplaced. Consider these additional findings
reported by Prove:

• 51 percent of surveyed consumers have been
victims of identity fraud or know someone who
has been.

• 23 percent have been victims of SIM swap
attacks, through which fraudsters take over
phone numbers by having them "ported" onto
new SIM cards.

• Better than a third (35 percent) have been
victims of social engineering attacks.

Federal agencies are voicing concerns. The Federal
Trade Commission stated in a 2023 blog post that it
is "keeping a close watch on the marketplace and
company conduct as more AI products emerge." It
added, "[W]e aim to prevent harms consumers and
markets may face as AI becomes more ubiquitous."

More recently, the Commodities Futures Trading
Commission warned that fraudsters are claiming
"huge returns" using AI-assisted technologies like
bots. "When it comes to AI, this advisory is telling
investors, 'Be very wary of the hype'," said Melanie
Devoe, director of the agency's customer education and
outreach office.

Other federal officials have also expressed concerns
about AI, AI fraud and the impact of AI fraud on
the financial stability of individuals and companies.
"AI has spread to every corner of the economy, and
regulators need to stay ahead of its growth," said Rohit
Chopra, director of the Consumer Financial Protection
Bureau.

"This is an all-hands-on-deck moment," said Kristen
Clarke of the Justice Department's Civil Rights
Division. Among other things, the DOJ is working with
the CFPB and FTC to ensure AI is not used to support
discrimination in lending and housing.

Patti Murphy, self-described payments maven of the fourth estate,
is senior editor at the Green Sheet. She also co-hosts the Merchant
Sales Podcast, and is president of ProScribes Ink. You can reach her
at patti@proscribes.net. .
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