As technology advances, so do the tactics employed by bad actors to deceive unsuspecting investors. One of the latest trends involves the use of generative artificial intelligence (Gen AI) to create convincing fraudulent media. This blog will explore how these scams operate and offer strategies to safeguard your investments.
Understanding Gen AI Scams
Generative artificial intelligence enables scammers to create highly realistic but artificial media including videos, images, and audio. Scammers use this technology to create fake endorsements from well-known financial personalities, making their schemes appear legitimate. AI is used approximately in half of all bank scams so knowing how to protect yourself is key.
An Example of How These Scams Unfold
Below is a four-step process that shows how an investment scam may start beginning to end:
- Deceptive Advertisements: Scammers produce fake advertisements featuring AI-generated images or videos of well-known and even famous finance experts. These ads are shared through social media platforms to attract potential victims.
- Invitation to Join: You may see an advertisement inviting people to join an investment club hosted on a social media page or through a messaging app like WhatsApp. Believing they are joining a credible group, victims follow the instructions but they’ve fallen into the hands of a fraudster.
- Stock Purchase Recommendations: Within the group, scammers provide detailed instructions to buy specific low-volume stocks. They coordinate the buying activity to inflate the stock prices.
- Price Manipulation: As stock prices rise due to increased buying, the scammers sell their shares at the peak, leaving the victims with devalued stocks and significant financial losses.
You’ve just seen firsthand how an investment scam works but without losing a dime which is the best way…knowledge IS power! Being vigilant about these above signs may save you a whole world of pain.
Detecting and Avoiding Scams
You may want to read our related blogs, How to Protect Yourself from Scams and 8 Tips to Protect Yourself Against the “Infinite Money Glitch” Scam
So how do you protect yourself as some scams don’t always follow the same pattern as the above four steps?
Verify Authenticity: Conduct thorough research to verify the legitimacy of any investment opportunity, especially those endorsed by well-known personalities. Look for official disclaimers or warnings from the supposed endorser…this is where reading the fine print is important. Check out our blog, How FINRA Helps Investors Avoid Investment Scams
- Identify Red Flags: Pay attention to signs of suspicious looking media. Deepfake videos may exhibit anomalies such as blurred edges, inconsistent skin tones, or out-of-sync audio. Similarly, deepfake audio may have unnatural pitch variations or pauses.
- Conduct Background Checks: Investigate the investment club’s claims and the individuals involved. Look for independent reviews and verify their credentials.
- Enhance Privacy Settings: Adjust privacy settings on messaging apps to prevent unsolicited invitations to groups. This helps reduce the risk of being targeted by scammers.
- Report Suspicious Activity: If you encounter a suspicious ad or message, report it to the relevant social media platform, your phone provider, or regulatory authorities.
Related: “Say Yes” Scam: What You Need to Know to Stay Safe
As generative AI technology becomes more accessible, the potential for sophisticated scams increases. By staying vigilant and informed, you can protect yourself from these fraudulent schemes. Always exercise caution and conduct due diligence before committing to any investment opportunity.
Stay informed and safeguard your investments.
You may be interested in our blog, How to Recognize Tax Scams During Filing Season
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