Category Archives: Imposter Scams

The Luring Test: AI and the Engineering of Consumer Trust

by Michael Atleson

Federal Trade Commission

In the 2014 movie Ex Machina, a robot manipulates someone into freeing it from its confines, resulting in the person being confined instead. The robot was designed to manipulate that person’s emotions, and, oops, that’s what it did. While the scenario is pure speculative fiction, companies are always looking for new ways – such as the use of generative AI tools – to better persuade people and change their behavior. When that conduct is commercial in nature, we’re in FTC territory, a canny valley where businesses should know to avoid practices that harm consumers.

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FCC Ruling on AI-Facilitated Fraud Illustrates the Need for Forward-Looking Enterprise Risk Management

by William Savitt, Mark F. Veblen, Noah B. Yavitz, and Courtney D. Hauck

From left to right: William Savitt, Mark F. Veblen, Noah B. Yavitz, and Courtney D. Hauck (Photos courtesy of Wachtell, Lipton, Rosen & Katz)

In response to a recent boom in AI-powered robocall scams, the U.S. Federal Communications Commission announced yesterday a Declaratory Ruling confirming that the Telephone Consumer Protection Act, which regulates telemarketing and robocalls, also applies to calls using AI-generated voices. Other federal agencies and state legislatures have similarly moved to police the use and abuse of audio “deepfakes” — in which widely available tools can be used to generate realistic voice simulations from brief recordings. As technology continues to outpace regulation, boards must embrace a proactive approach to risk management, accounting for AI’s capacity to compromise long-standing practices in cybersecurity and internal controls.

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New Impersonator Rule Gives FTC a Powerful Tool for Protecting Consumers and Businesses

by Lesley Fair

photo of the author

Lesley Fair (photo courtesy of the author)

To turn the old adage on its head, imitation is the insincerest form of falsity. After years of fighting back against scammers who impersonate government agencies and companies, the FTC proposed a Trade Regulation Rule on Impersonation of Government and Businesses. The Rule would allow the FTC to recover consumer redress from impersonators or to seek civil penalties against those who violate the Rule. After a painstaking process of considering public comments about the proposal, the FTC just published a Final Rule  – and we think it’s an important step in the fight against this form of fraud. Continue reading →

The New Threat in Business Email Compromise Schemes: Video “Deepfakes” of Corporate Executives

by Jonathon J. Rusch

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Photo courtesy of the author

Cybercriminals around the world use a variety of exploits to conduct fraud schemes directed against individuals, companies, and government agencies. One of these schemes that has proved highly lucrative for cybercriminals over the past decade is the so-called “business email compromise” (BEC) scheme.[1]

BEC schemes typically involve cybercriminals’ infection of the email account of a corporate executive, then impersonating that company executive via email to direct a subordinate employee to wire-transfer a substantial amount of funds to one or more accounts that the cybercriminals control. The United States Secret Service has estimated current global daily losses to BEC schemes at approximately $8 million (an annualized $2.9 billion).[2]

Another online fraud technique that has been emerging more recently is the use of so-called “deepfakes.”  Deepfakes — a form of synthetic media that uses “deep learning” (artificial intelligence) technology to synthetically create or manipulate various media, including video, audio, and images[3] — are well-recognized in the U.S. and United Kingdom banking sectors as a significant threat to bank customers.[4] Voice deepfakes, for example, can be used to deceive customers as well as bankers into transferring funds out of customer accounts.[5]

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Facts About Fraud from the FTC – and What it Means for Your Business

by Lesley Fair 

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Lesley Fair (photo courtesy of author)

The FTC just issued its 2023 Consumer Sentinel Network Data Book jam-packed with facts about the kind of scams consumers have reported to us. Has the reported dollar amount lost to fraud gone up or down this year? And what are the most frequently reported scams? At this point you may ask, “I run a lawful business. Why should it matter to me?” Two reasons. First, scammers have you, your company, and your community in their sights and the Data Book can help you defend against emerging fraud trends. Second, scammers often try to mask their illegal intent by hiding behind legitimate businesses. For companies that work hard to maintain their good reputation, it’s not enough not to be a scammer. You also don’t want to be “scam-adjacent.”

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