That may not be your daughter crying on the phone. Here's what to ... - Morningstar

By Alessandra Malito

Many adults don't even know when they're using AI technology

You already know not to click on suspicious emails, and to ignore those typo-laden texts claiming to be from a delivery service with an undeliverable package. Now fraudsters have found a way to take scam phone calls to the next level.

These are similar to typical phone scams, where you get a call from someone claiming to be a grandchild in trouble who needs money or someone impersonating a relative seeking an investment. But now scammers are becoming more sophisticated with the use of artificial intelligence.

Read: Sam Altman ousted from OpenAI, hired at Microsoft: What we know so far

Fraudsters are able to use technology to replicate a person's voice, and then use it against someone in what becomes a moment of panic. Older Americans tend to be popular targets for scammers. Adults over 60 years old lost $3.1 billion in 2022, up 84% from the year before, according to the Federal Bureau of Investigation's Internet Crime Complaint Center. The average loss was about $35,000 per person.

In response, the Senate Special Committee on Aging this month held a hearing on "modern scams," led by Sens. Bob Casey, a Democrat from Pennsylvania, and Mike Braun, a Republican from Indiana. Witnesses included an attorney and intended scam victim, as well as scam and data experts.

Tom Romanoff, director of the technology project at the Bipartisan Policy Center, spoke about the intricacies of this technology during his testimony.

The Federal Trade Commission has also issued a consumer alert on voice cloning, and recently promoted a "challenge" for innovators to create solutions that would combat this type of fraud.

Artificial intelligence is becoming so advanced, individuals don't even know they're using it. In a survey of 6,000 people, 34% said they have never interacted with AI and 32% said they weren't sure -- but 84% had recently used at least one tool powered by artificial intelligence, according to a report from AI-company Pegasystems.

From the archives (September 2023): 'A gift to scammers': Thieves are using artificial intelligence to develop new scams, improve old ones

MarketWatch spoke with Romanoff about what older Americans should look out for, and how they can protect themselves.

MarketWatch: What are some of the scams older Americans in particular should watch out for?

Romanoff: A lot of the scams older Americans experience include romantic scams, investment scams, the relative in distress -- these are scams that have been around for years. Now we have artificial intelligence, and we are starting to see them scale up. People who commit fraud have access to technology to microtarget individuals or gather background information to gain trust of the potential victim. So we are starting to see an adoption of existing scams that have been around for awhile in an AI era.

That became very scary for folks. What you're seeing right now is voice-generated, where someone trying to scam an individual can clone a voice with less than three seconds of that person. All they need is three seconds.

MarketWatch: How does that technology work?

Romanoff: [There are] a couple of ways criminals are doing it. They are finding individuals like myself, who have a lot of public testimony or a lot of conversations that are publicly available, and are able to take those recorded pieces and put them into a generative-AI tool. It takes one AI that will try to replicate the voice, and the second AI will scan the replication and say, here's where it sounds tinny, or give the feedback to the first. The first will refine, and they'll go back a couple thousand times until they have something convincing. It's not just the tone and voice itself, but also how you speak; your rhythm. The more information you have to train the model, the better it'll be.

Three seconds is all they need to make an emergency situation of a loved one. They're also calling people up, leaving an open line and people will respond, such as saying, "Hello? Who is this?" You hear a click and it cuts off. Those are folks who are trying to record your voice and then feed it into the AI in order to generate the voice clone that could be used against loved ones.

It is hard to find a way to beat that or detect it, because it's happening over the telephone and perpetuating the need for an immediate response: an accident or kidnap. They're trying to force you not to think rationally, but with emotion.

MarketWatch: What can Congress do to help in a situation like this?

Romanoff: One of my co-witnesses was almost a victim of a scam. He talked about his son's voice and how it was used to extort money. When he reported it to law enforcement, there was nothing law enforcement could do about it because no money was exchanged. That's somewhat of a problem because by the time there is an exchange of funds, it's almost always going to be cryptocurrency, and there is nothing someone can do then because the cryptocurrency format is untraceable or it gets washed. It's like a double tie behind your back.

In addition to domestic fraudsters doing this, there is the ability for this to be done internationally.

The role of Congress and regulators is to try and get ahead, by regulating or providing resources to law-enforcement agencies to provide resources or mediation. When it comes to identifying trends, AI can do a lot of work in sifting through a lot of trends and flags law enforcement can use to get ahead of scam artists, but there is a long road ahead.

MarketWatch: What can people do in the meantime, especially when it resembles an immediate situation?

Romanoff: As human beings, we tend to have red flags or unconsciously flag something as not feeling right because of behavioral cues, like grammar in an email, or a phone number you don't recognize. With the current sophistication of these scams, fraudsters are able to get around that by spoofing phone numbers or using grammar tools if English is not their first language.

Good cyber hygiene is very important, especially for older adults. When you're a retired individual, you're becoming increasingly the target for folks, so getting educated on the current trends of this area are important.

Low-tech mediation is very useful. Things like having a family password for individuals -- a password that you don't email each other, but when you're having an important conversation, like if you're ever asking for money or information, you can check. Don't ask, "What's your middle name?" or [a] cousin's middle name. You're asking inside information that someone impersonating a loved one wouldn't know.

This interview was edited for length and clarity.

-Alessandra Malito

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11-25-23 1546ET

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