“People aren't worried about being scammed.”

When Clark Hefnagels' grandmother was scammed out of $27,000 (£21,000) last year, he felt he had to do something about it.

“I felt like my family was vulnerable, so I felt I had to do something to protect them,” he says.

“I felt a sense of responsibility to handle all things technology-related for my family.”

As part of his efforts, Hoefnagels, who lives in Ontario, Canada, looked into fraudulent, or “phishing,” emails his grandmother had received through ChatGPT, a popular AI chatbot.

He wanted to know if it would be recognized as a scam, and it quickly was.

From there, an idea was born, which grew into a business called Catch: an AI system trained to spot fraudulent emails.

Currently compatible with Google's Gmail, Catch scans incoming emails and highlights those that are deemed to be fraudulent or potentially fraudulent.

AI tools like ChatGPT, Google Gemini, Claude, and Microsoft Copilot are also known as generative AI because they can generate new content.

Initially, these were just text responses to questions, requests, or to start a conversation. But now, generative AI apps can do a lot more: create photographs and paintings, create audio content, compose music, write documents, and more.

People from all walks of life and industries are increasingly using AI to make their jobs more efficient. Unfortunately, so are scammers.

In fact, there's a product on the dark web called FraudGPT that allows criminals to do a variety of things, including creating banking-related phishing emails and creating custom fraudulent web pages designed to steal personal information. You can create content that promotes fraud.

Even more worrying is the use of voice cloning, which is used to trick relatives into believing that a loved one is in need of financial assistance, and in some cases, could even be used to trick relatives into believing that the person has been kidnapped and a ransom needs to be paid.

There are some pretty alarming statistics about the scale at which the AI ​​fraud problem is growing.

Reports of AI tools being used to try to defraud banking systems increased by 84% in 2022, reflecting the latest figures from anti-fraud organisation Cifas.

The situation is similar in the United States, where a report this month said AI is “significantly increasing the sophistication of cybercrime.”

Given these growing global threats, one would think that Hoofnagels' catchy products would become popular among the general public. Unfortunately, this has not been the case.

“People don't want that,” he says. “We found that even after being scammed, people don’t worry about being scammed.”

“We spoke to a guy who lost $15,000 and said we would have found his emails, but he wasn't interested. People aren't interested in any level of protection.”

Hofnagels added that the man never thought it would happen to him again.

It's the older demographic that's worried about getting scammed, he says, but rather than buying protective gear, he says they often assuage their fears with a very low-tech tactic: telling kids to simply not answer or reply to anything.

Hoefnagels says he completely understands this approach: “After what happened with my grandmother, we basically said, 'Don't answer calls that aren't in your contact list, and don't email anymore.'”

As a result of the indifference Catch has faced, Hoefnagel said he is now winding down the business while simultaneously searching for potential buyers.

While individuals are being vocal about fraud, especially with the rise of fraudsters leveraging AI, banks cannot afford to do so.

A global survey conducted in January found that two-thirds of financial companies see AI-enabled fraud as a “growing threat.”

Thankfully, banks are increasingly leveraging AI to fight back.

AI-powered software developed by Norwegian startup Strise has been helping European banks spot fraudulent transactions and money laundering since 2022. The software automatically and quickly trawls through millions of transactions per day.

“There are a lot of puzzle pieces that need to fit together, but AI software can help automate the checks,” says Marit Rødevand, co-founder of Strise.

“This is a very complex business and compliance teams have grown their headcount significantly in recent years, but AI can help pull this information together very quickly.”

Ms. Rodeband added that the key is to stay one step ahead of criminals. She said: “Criminals don't have to worry about laws or compliance, and banks are also better at sharing data, whereas banks can't share data due to regulations, so criminals can move faster. You can jump into new technology.”

Featurespace, another technology company that develops AI software to help banks fight fraud, says it can spot unusual events.

“We're not tracking the behavior of fraudsters, we're tracking the behavior of real customers,” says Martina King, CEO of the Anglo-American company. .

“We create statistical profiles of what good normality looks like.Based on the data banks have, we can tell whether something is normal behavior or something is abnormal and out of balance. You can check.”

The company currently works with banks including HSBC, NatWest and TSB, and says it has agreements in 27 countries.

Back in Ontario, Hoefnagels said he was initially frustrated by the growing number of people who didn't understand the increased risk of fraud, but now people don't realize it can happen to them. He says he understands that he just doesn't think so.

“I have become more empathetic towards individuals; [instead] We want to do more to encourage business and government.”