Fraud Prevention Leaders Notice Drastic Increase In Frauds Using Generative AI: Report

Around 449 senior fraud prevention leaders across multiple countries, including India, revealed a sharp increase in fraudulent activities, as per a new report from Experian, conducted in collaboration with Forrester Consulting. A staggering 52 per cent of respondents reported higher fraud losses in the past year, while 46 per cent recorded more frequent attacks. Compounding the issue, 54 per cent of businesses say that false positives, when legitimate transactions are wrongly flagged as fraud, are costing them more than actual fraud losses, the report added.

Shail Deep, Chief Operating Officer (COO) of Experian EMEA & APAC, echoed this sentiment. “Our research confirms that 85 per cent of fraud experts believe GenAI has fundamentally altered the fraud landscape. More than half have reported an increase in fraud-related losses over the past year. The need for flexible, AI-powered fraud prevention strategies has never been greater.”

Amid these growing threats, 73 per cent of industry leaders acknowledge that AI and Machine Learning (ML) solutions are essential to staying ahead of fraudsters.

A New Breed of Fraud: Organized and AI-Driven

The report also brought notice of a transition from isolated fraudsters to well-coordinated criminal syndicates, many of which are exploiting GenAI to scale their operations. Deepfakes, synthetic identities, and automated fraud schemes are making it increasingly difficult for companies to detect fraudulent activity. In fact, nearly half of surveyed businesses admit they struggle to identify GenAI’s role in fraud attacks.

GenAI has increased the industrialisation of fraud, allowing criminals to launch more sophisticated scams at an unprecedented scale, the report noted. To counteract this, businesses will have to embrace AI-driven fraud detection tools and integrate multiple layers of security to build a more resilient defence system, the report added.

Additionally, in India, 77 per cent of fraud decision-makers believe working with external partners is critical to curbing financial crimes. Furthermore, 61 per cent say that sharing fraud-related data through consortiums has proven to be an effective way to track emerging fraud trends.

ML-driven fraud detection to rescue

The benefits of such collaborations were evident, as per the report around 74 per cent of Indian businesses reported a strong return on investment from participating in fraud prevention alliances.

The promise of ML-driven fraud detection seemed to fade when many Indian companies still faced obstacles in adopting the technology. The report found that 48 per cent of businesses struggle due to inadequate training data, while 60 per cent cite poor data quality as a significant barrier.

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