Around a year after ChatGPT was launched, artificial intelligence chatbots and the engineers who use them have become pioneers. However, rather than leading us toward some new and improved future, they’ve opened the floodgates to a surge in fraud, phishing, and scams.
The income tax agency used data analytics and innovative technology to recover ₹36,000 crore in unpaid tax demand during the current fiscal year, according to ET. This involves recovering ₹27,000 crore from corporate tax and ₹9,000 crore from personal income tax by December 20. With one quarter remaining, the department anticipates an increase of at least ₹50,000 crore by the end of the fiscal year. “Till December 20, the total recovery from outstanding demand was ₹36,000 crore,” a top official told ET.
In November, the verification platform Sumsub reported a shocking tenfold increase in detected deepfakes globally across various industries between 2022 and 2023. Particularly in North America, fraudulent deepfake incidents soared by a staggering 1,740%. Cybersecurity experts have been warning that AI-driven text, image, and audio generators are turbocharging cybercrime by offering criminals unprecedented speed, specificity, personalization, scale, and accuracy. These advancements have paved the way for a new era of fraud, including identity hijacking, where individual identities can be easily recreated for malicious purposes.
Reports of AI-generated fraud have skyrocketed, ranging from deepfaked scam phone calls to manipulated images of celebrities like Taylor Swift and even video impersonations of senior company executives and political figures like President Joe Biden. LexisNexis Risk Solutions, a cybersecurity and data analysis company, has identified the latest iteration of AI-powered fraud: tax-related scams.
Tax fraud involves stealing personally identifiable information (PII), such as social security numbers and birth dates, to file a tax return in someone else’s name. According to Haywood Talcove, the CEO of LexisNexis’ Government group, tax fraud isn’t new, but advancements in AI tools have accelerated the problem beyond what government entities can control. Fraudsters now obtain PII to create convincing fake driver’s licences, which are readily available for purchase on the dark web.
Some PII can be obtained through phishing attacks, impersonation scams, malware, or data breaches, while other information may be publicly available online. This makes it relatively easy for fraudsters to impersonate individuals and file tax returns using their identities. These fraudulent tax returns, complete with the scammer’s face on the ID but the victim’s information, can pass security checks on government websites.
Once logged in, fraudsters use AI tools to file seemingly legitimate tax returns with minimal risk of detection. They then provide their banking information and receive fraudulent refunds. Talcove warns that this scam isn’t limited to the IRS but extends to states with income taxes as well. Any agency using trusted referees to verify identities with a driver’s licence is vulnerable to similar impersonation scams.
Victims often remain unaware of the fraud until they attempt to file their legitimate tax returns, only to discover that someone else has already claimed their refund. This initiates a lengthy and arduous process of proving innocence to the IRS and dealing with financial repercussions. Despite efforts to track these scams on platforms like Telegram and the dark web, the full extent of this issue remains unknown to authorities.
To protect against this type of tax fraud, Talcove recommends filing taxes early and implementing multidimensional security measures. Relying solely on IP address checks, facial recognition, or passwords is insufficient, as fraudsters can easily circumvent these measures. Instead, a combination of security elements like two-factor authentication and IP address checks is necessary. Talcove also suggests that government agencies use more reliable databases for facial recognition, such as the Department of Motor Vehicles’ database, rather than relying solely on driver’s licences.
The IRS, when contacted for comment, directed inquiries to resources on its website regarding tax scams and fraud prevention, emphasising the importance of proactive steps like obtaining an identity protection PIN. Taxpayers are urged to remain vigilant and report any suspicious activity promptly.
To know more about how to protect yourself from AI scams, you can refer to this video: https://www.youtube.com/watch?v=iBEPJyZcaP4
In conclusion, the rise of AI-driven fraud poses significant challenges for individuals and government agencies alike. By understanding the tactics used by fraudsters and implementing robust security measures, taxpayers can mitigate the risk of falling victim to these sophisticated scams. However, it will require ongoing vigilance and collaboration between the public and private sectors to stay ahead of the evolving threat landscape posed by AI-powered fraud.