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Navigating the AI-Driven Surge in Identity Fraud and Deepfakes with Au10tix and Dana Porter
Identity fraud is evolving at lightning speed, driven by advancements in AI technology. Join us as Dana Porter from Au10tix shares groundbreaking insights from their Global Identity Fraud Report, revealing a dramatic rise in cyber threats and highlighting the alarming use of AI-powered bots in social media. Guided by Ian Horne and Scarlett Sieber, we uncover the nuances between 'slow burn' and 'sudden burst' fraud attacks and how AI is turbocharging these threats. Delving into the rise of deepfakes, we explore the complex challenges this technology poses for identity verification, making it easier for criminals to manipulate identities in real-time and outpace traditional security measures.
The conversation doesn’t stop there. We tackle the vital role of regulation and enforcement in fighting back against these persistent threats, especially in the crypto and payments sectors. Dana sheds light on the transformative effect of the 2023 MiCA regulation in Europe, which has succeeded in curtailing fraud in crypto markets by imposing stricter customer onboarding practices. We also explore Interpol's global operations that disrupt organized crime, alongside innovative solutions like decentralized identity and verifiable credentials. For both consumers and businesses, practical strategies to increase security are shared, emphasizing the importance of constant vigilance and multi-layered defense systems rather than relying solely on regulatory frameworks. Tune in for invaluable insights into securing your digital identity in a rapidly changing landscape.
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Hello and welcome to the Money Pot. I'm Ian Horne, head of Content for Europe at Money 2020. And today's episode is all about identity fraud and deepfakes, so maybe don't take that at face value. In today's episode, we're joined by Dana Porter, Strategy and Product Executive at Au10tix, who, as many of you will know, are in the business of identity verification and risk management and have just produced the latest edition of their Global Identity Fraud Report. We host this episode at a wild time for ID and verifications.
Ian Horne:It's becoming easier and easier for fraudsters to rip off your identity. Social media is rife with bots and artificial intelligence, and automation allows scammers to scam the hell out of you at light speed. Sounds like a good time to be a fraudster, to be honest, but if you're a fraudster who happens to be an avid listener to the Money Pot, I'm hoping we can dampen your day just a little. It's not just me and Dana on the microphone today. I'm joined by Money 2020's very own Scarlett Sieber, our fearless leader and chief strategy and growth officer and your co-host for the day. Scarlett, good to have you with us. It feels like a big deal to have you here, so I'm either doing something right or you've been asked to rein in my usual nonsense, but please don't answer that I'm going to introduce Dana very quickly, but first welcome and let's take a glance at this report, scarlett. Are there any key findings that really stand out to you?
Scarlett Sieber:There definitely is, Ian, and again, thank you so much for having me. Obviously, I'm a very large fan of The Money pot, back from inception in 2019, when I was sitting with Rachel Morrissey in a room together, and this became a reality, and I very rarely get to be part of it. So why am I here? Yes, of course, because of your intellect and charm, Ian. But bigger than that, we have new and interesting data, which you know. I love.
Scarlett Sieber:Numbers, especially new numbers, and of course, we have the powerhouse that is Donna to be talking about this Identity fraud big topic right now. We see it across all of our shows, even leading up into Vegas coming very shortly. But two stats to the question that you asked, two stats that really stuck out to me from the report Social media top of my mind, I've got young children thinking about what the future of that world looks like for them and social media rose three times the amount of malicious activity happening on social media three times since last quarter. That is a big change. And not only that 32% of all internet traffic was malicious bot driven, which is terrifying, and you know if I didn't already have sleepless nights. They have now been exacerbated by some of these data points.
Ian Horne:Yeah, it is actually slightly terrifying, isn't it? It's a fascinating report and we're going to dive into it. So, dana, you've been really patient here. First, let's bring you in, dana, welcome to the Money Pot. And quickly, very quickly, let us know about your role at Authentics. As Scarlett says, you're a powerhouse here, so talk us through what you do.
Dana Porter:Thanks for having me guys. First thing, good morning At Authentics. You know we're, as you mentioned, an IDV powerhouse and I am looking at strategy, product and marketing and seeing how we can stay ahead of all of these killer trends that we're seeing in this very active industry that Scarlett just mentioned. Thank you for that, donna.
Scarlett Sieber:Obviously, I gave a few statistics from the report, but more broadly, this is something that you wake up every day probably thinking about, and can you give us an idea of the scale of identity fraud for our listeners? And more broadly, we know that people don't really understand what's going on, so just give us an idea of the true scale of what's happening here with identity fraud.
Dana Porter:So I want to start with what you just said, scarlett.
Dana Porter:If you think, about 32% of all internet traffic is bot generated, that's quite scary.
Dana Porter:And now if a third of all that bot generated traffic is actually malicious so that's according to a recent Forbes survey and the reason this scale is so big is because of something that we're calling impersonation bots, which are, in essence, computers mimicking human behavior.
Dana Porter:Now that's causing a burst in fraud, and we've kind of separated them into two types of fraud that we're seeing in them, two types of attacks. One type of attack is what we call the slow burn, so they're taking a document ID and you have maybe under 2,000 permutations of that same document, compared with what we call a sudden burst, where you're seeing a single document with over 20,000 permutations. The analogy I like to do with that is the slow burn is someone at the cashier Every day they're taking a candy bar and sticking it into their handbag versus a sudden burst, which is Bonnie and Clyde coming in with guns, blazing into the bank, taking everything they can and then disappearing can and then disappearing. So I think, with AI and all of these trends, we're seeing more and more of these types of activities that people really need to watch out for.
Ian Horne:Yeah, and AI basically means we can do the turbo speed right. I mean, just how much exactly has that accelerated the numbers of fraud attacks?
Dana Porter:Oh, I think it's dramatic. It's dramatic and you know, when we say AI, ai is enabling both the fraudsters, like you said in your opening, as well as the people who are protecting against that, and the evolution of AI is actually going into deep fake right. So if in the past, we had these fraudsters sitting in their garage and just changing the date of birth so that I can buy alcohol in your local store, well now obviously this is progressing and it's not just changing the field in my document ID. The next step is changing the picture my face. The step after that is changing the animated picture of my face so that I can pass a liveness test, and the next step after that is full-pledged avatars that can pass as being yourself. So I think where we're heading with this is what we're calling the industrialization of fraud generative tools that are maturing so that capable professionals and I don't mean experts, I'm deliberately saying just capable professionals can start using generative AI to multiply perfectly misleading fraud attempts and that can impact industries, nations and entire global markets.
Ian Horne:Yeah, and quick just to add on this how good are deepfakes getting right now? Because we talk about AI and sometimes artificial intelligence gives us really convincing good things, but then also I'm a content creator in some respects, I see some really bad stuff of AI too. So when it comes to deep fakes, how accurate are they right now?
Dana Porter:So you know they're okay. They're okay but not great. So you can see in our reports that when looking at the types of fraud that we're stopping today, still 10 times more attempts are in document fields or pictures and less in the areas of videos or selfies. And why is that? Because we are very, very good at stopping selfies, because when you've got all these liveness technologies out there, they're still not quite there, but we can. Honestly, we can't rest on our laurels because we see that the pace of AI technology adoption is just so quick that I think we need. This is a true problem and we're obviously. It's keeping us up at night and we're updating our technologies literally on a daily basis. Very, helpful.
Scarlett Sieber:You know, I one of the things that I think a lot about and I wrote a book on it was around embedded finance, and I've actually had conversations with Ron, the founder of Authentics, about that, about this, in the past and it kind of has to be part of this conversation. As an industry, we're at a point where transactions are made essentially seamlessly and as quickly as possible and the industry is moving more and more. How do we make that even more seamless? How do we make that even more quick? But, of course, when you have things that move forward and you get this more seamless experience, there is a bigger challenge and opportunity for people who are trying to take advantage of that around safety, especially around payments and identity verification. So, donna, I would love to hear from your perspective Do you believe that we can ever truly get to a place where transactions are completely immediate or is part of the safety of it, by having a little bit of resistance there? Will there always be a layer of authentication for the customer?
Dana Porter:So, scarlett, I think you've said it there's a constant trade-off between having the best customer experience and securing fraud. I think there's honestly, I think there will forever be need to be some sort of trade-off. The way to go about it is, first of all, make sure that you're masking the complexity of everything that you're doing from the consumer. We pride ourselves that we've reached a point that, with the right processes and the right level of automation, you can actually, just within seconds, still make sure you have the right identity. How do you do that Is that you make sure that your systems in the background. They can check any document, any language, any geography.
Dana Porter:On top of that, add a layer that checks beyond the individual transaction, looks across any fraud patterns that you've seen across multiple companies, what we call the multi-layer and in order to do that so quickly, obviously you need to leverage AI. I think that's one leg. The second leg obviously will be that, as we go further into digital ID and verifiable credentials and we can talk about that a little bit later that would also help create a seamless customer experience. One last point I want to mention here is that we always talk about the end consumer, but there's another person we need to be looking at which is the service provider employee. It's getting so hard for the service provider to meet up with the regulation.
Ian Horne:to make sure that they comply, to make sure that they can see across all the fraud happening in real time and deliver customer experience that one of our focus is to make sure that those people are also having a good customer, a good experience from a fraud perspective, oh for sure, and we're going to pick up on regulation in a bit. But I want to go back to that social media kind of angle that we discussed at the start of the podcast, because we know deep fakes are everywhere now, of various quality, and we see the impact of bots, especially on social media, in the current US election cycle, for instance In fact we've seen it in several elections prior to that globally. It's not just a US thing, right? So if we know that a large portion of social media accounts are bots or at the very least people making kind of cheap pseudonyms or whatever, how can we easily identify a bot account? Are there like obvious tells that they?
Dana Porter:have. So, first of all, social media is a huge problem. You know, just last year there were 259 million new social media accounts. Oh my God, that's a number that's just staggering. That means there's a new user every eight seconds. Our reports show that within our serial fraud monitor activity, 16% of all fraud-related attempts were from social media. Now, in the past this was just anecdotal, right, you could say you were going to on a date and you thought this guy was X and he ended up being Y because it was a fraudulent account. But now there's actually much bigger implication.
Dana Porter:There are monetary implications for fake social media accounts. First of all, they create a fake persona that gives them credibility, which allows them to create fraud within the social media platform. But it's not just that. Once they can obtain either a social security number or PII information, they can actually almost behave like a bot doppelganger and create much bigger financial impact. Much bigger financial impact. So what do we do, I think, from a human perspective? Well, you can go into that account. You can see if the picture, if the account doesn't have pictures, or if they're promising millions of dollars in five minutes, clearly there's a fake. Our belief is that it's impossible to go in and to take a fake just by looking at it. Our view is you have to prevent these accounts from being created. So what we do, as we sit as gatekeepers in the beginning and with our serial fraud monitors, we look across all of the accounts, we look for pattern recognition, we look for fraud patterns that we see and we prevent these accounts from being created to begin with.
Ian Horne:Yeah, I mean. One thing I'll quickly jump in here with is people have talked for years about social media platforms being used for payments, and you were saying just about embedded finance potentially getting to a point where you know we can verify who the person is and then have seamless payments, right, Do you think that might be the key towards making social media more verifiable by building payments into it, or is that a step too far? Do you think we'll ever get there?
Dana Porter:Well, I think we're already seeing payments embedded somehow into social media. People are getting paid on social media. You've got buyers and sellers on Instagram and TikTok, which is why we're seeing the fraud creeping very fast into those places. I think we're going to be seeing more and more of that happening. Exactly how Time will tell.
Scarlett Sieber:I'd be remiss, Donna, not to talk about when we're thinking about things like fraud and identity, not to bring in regulation here. Of course, as an American sitting here I'm now in London, but generally in the US regulation is top of mind recently and do you believe that regulation materially improves the situation as it relates to identity fraud, Because obviously there's a lot of opportunities there and, if so, which regulations in particular do you believe have been the most notable?
Dana Porter:And, if so, which regulations in particular do you believe have been the most notable? So nobody likes regulation. The slogans are it stifles innovation and creativity, etc. But our view that in our field it actually does have an impact. We've seen both crypto and payments combined decrease by roughly 10 percent in terms of the number of fraud attempts, and we think that part of the reason for that is regulation and enforcement. And maybe let me give you a couple of examples.
Dana Porter:Meca is the regulation that was introduced for crypto in 2023 in Europe. Before that was introduced, this was a very unregulated industry and basically anyone anonymous could participate in trading platforms, leaving them wide open for fraudsters to take advantage. Once this was introduced in Q2 last year, there was an immediate decrease of about 50% the following quarter, so you could see the immediate impact. What Mika sought to do was to add the rigor of customer onboarding that you see in banking into crypto. Unfortunately, because Bitcoin prices have risen so much, we're now seeing fraud. Everybody's like bees to the honey. They're back into crypto, so we're seeing that rise again. But that was actually one really good example. I will say that the other side of regulation is enforcement, and we've seen Interpol sort of do a crackdown of disrupting organized crime. They did this big thing involving 61 countries at the end of the last year and big of Q1 this year. They froze 6,000 accounts and you saw the payments industry really decline because of that involvement. So in my mind, both regulation and enforcement have a significant role in decreasing fraud.
Ian Horne:You mentioned the crypto kind of decline in fraud, which is in some ways expected. Those who obviously aren't into crypto probably don't expect that. What did make the big difference? Are you sure it? Was it just regulation, or is it more the fad element of it, you know? Are you finding that basically fraud follows market cycles and things like that? Is that how this works?
Dana Porter:I think fraud is opportunistic. So when there was a crackdown in one place, then the fraudsters went elsewhere. So the minute Mika was introduced in Europe, we saw a decline until they almost sat and thought about it what's the next big thing? How can we do? They went elsewhere.
Ian Horne:Then again Bitcoin. When the price was so lucrative they came something like decentralized identity or some other thing we could do that would stop us from constantly playing cat and mouse or fraudsters.
Dana Porter:So, you know, at an industry perspective, we know that things like verifiable credentials it's something that we were very involved with helping Microsoft set up, for example, and I know there's various solutions out there or the introduction of digital IDs, the notion is that you have a higher level of authentication with verifiable credentials. The idea is verify once, use many bring back the power to consumers to decide who they want to share their identity with and how. So those things, I think, are really good news for our industry. I just think they're going to take longer and longer to adopt In the short term. There are a lot of things that you can do on a personal level, and that's where we Authentics come in.
Dana Porter:Our advice is to adopt solutions that are very heavily reliant on AI. And you know, for us at Authentics, we started out our business in the airport security business, which is probably the strictest level of security that you have, and then we took that know-how into the IDV business and we think you need to be constantly thinking of what else that you can add to IDV. It's not a single check, it's biometrics, it's PII personal information, it's AML, it's adding the power of the group on top of it. So we have our consortium where people sharing fraud patterns between them. So I think our advice is to make sure you're partnering with the best solution out there to make sure that you're protected.
Scarlett Sieber:Very helpful, very helpful, donna, and you did not disappoint with even more stats than I started off with. So lots of interesting and terrifying numbers that were shared there. If we just end with and you gave a little bit of this just now. But could you just elaborate a little bit? As someone who is sitting on the other side of this, feeling a little bit more anxious maybe than when we started this conversation, can you give some practical tips for our broader listeners? What is the best way to protect yourself, whether you be the end consumer or you talked about a bit earlier, you know that that business. What are some of the best things that you can do?
Dana Porter:So let's start a second from an end consumer perspective. You know the saying just because you're paranoid doesn't mean they're not after you. It's almost like I want to add that word of caution for an end consumer. You should be aware you should be looking out when you're it's on social media, but everywhere you're getting a link. I mean think before you click. Think before you share your data. It is getting harder. Before you click, think before you share your data. It is getting harder. People are out to get you in this world and you should be more suspicious than you were in the past.
Dana Porter:Our main business is with corporations, with businesses, and for them our piece of advice it's almost we think they should self-regulate. Don't just wait for the regulators to tell you what you have to do. There's so much at stake here. Right, it's your money, but it's also your reputation. If you let your fraudsters in, then there's so much for you to be dealing with. So our advice is make sure you're applying multiple layers of defense, make sure you're on top of it, you're having the right partners and that you're constantly improving your gatekeepers in letting people into your business.
Ian Horne:Brilliant. Thank you, dana, and I love that. That's very much on the front foot and proactive, which is great. Anyway, thank you again for joining us, dana. That's it for this episode of the Money Pot. We want to thank Dana Porter for being an authentic and verifiable presence on the show today Also a valuable one, and don't forget, you can be part of the Money Pot too. Please send us pitches to podcast at money2020.com and don't forget to follow us wherever you listen to podcasts. Thank you for listening.
