Fraud becomes a pressing issue due to AI, prompting the need to educate children in schools on how to identify it

Is there anyone you know, including yourself, who has fallen victim to fraud? If the answer is yes, you’re not alone. According to the UK’s Office for National Statistics (ONS), there has been a 25% increase in fraud cases in 2021 compared to the previous year. In fact, fraud accounts for more than 40% of all crimes committed against individuals, making it the most prevalent crime in the UK.

If these statistics aren’t alarming enough, there is evidence that AI is making it harder to detect scams.

People often blame victims of fraud for being stupid or trusting enough to fall for the scam. But it’s time to accept that it can happen to anyone. It’s such a big problem that we need to revise our concept of fraud because it only happens to gullible or vulnerable people. The human brain cannot keep up with all the deceptions made possible by new technology.

So we need a new approach where financial institutions and companies are responsible for identifying or facilitating fraud and harnessing artificial intelligence to detect suspicious transactions. It’s not reasonable to expect consumers to know when they’re being scammed if banks and social media platforms can’t.

Who falls victim to fraud

If you were asked who is most likely to be a victim of fraud, what would your answer be? If you’re like most people, you’ve probably thought about older adults. Investment bankers, IT specialists or young adults may not have come to mind.

This misunderstanding of who is vulnerable or prone to fraud is one of the core issues surrounding fraud. For example, a 2010 study by credit information company Experian that examined identity fraud in the UK found that two age groups, 25-34 and 35-44, represented 54 percent of victims, while over-65s represented just 4 percent of victims. victims of such frauds.

Cryptocurrency victims tend to be young, well-educated, professional, and traders with risky portfolios.

You only need to read the list of major investors (and victims) in the cases of scammer cryptocurrency exchange FTX and fraudulent medical technology company Theranos to understand that even the most savvy investors and celebrities can fall victim. Their backers included media moguls, politicians and hedge fund managers.

UK Finance’s 2023 report shows that 18-24-year-olds are increasingly being targeted by fraudsters, and are far more likely to fall victim to an impersonation scam than those aged 65 and over. The number of 13–17-year-olds who have fallen victim to scams through gaming has also increased sharply.

Development of educational and therapeutic programs

Many schools around the world have implemented online safety programs.

However, the currently available programs are generally quite weak in terms of fraud protection.

For example, the children’s charity NSPCC has programs to protect children from online abuse, stay safe when using social media and from legitimate but harmful content – but not from online scams.

Fraud prevention should be taught in schools and universities as part of the curriculum.

For older adults, the charities AARP and AgeUK offer guidance and resources, but it is unclear how effective or widely used they are.

Anti-fraud programs, education and information have rarely been studied and we have no data on their effectiveness. We need to develop programs for each age group and evaluate their effectiveness.

Improve intimidation

One of the most important theories in criminology is deterrence theory, which states that reducing crime is related to the severity of punishment and, most importantly, the likelihood of being caught.

Research shows that increasing the likelihood of getting caught is far more effective than increasing the punishment. Scammers, however, have little to worry about. According to the UK government, fraud accounts for more than 40 per cent of all crime, but takes up less than 1 per cent of police resources.

Companies must protect consumers better

During the COVID pandemic, the media reported that Google was blocking 18 million coronavirus scam emails every day. Despite these efforts, according to a report by the Federal Trade Commission (FTC), the US agency that oversees consumer rights, technology companies and especially social networks are a breeding ground for scammers.

In fact, the FTC reports that a quarter of people who lost money to fraud said the process started on social networking platforms.

The nature of social media sites allows scammers to hide behind fake identities and pretend to be a legitimate business. They also allow scammers to reach millions of people at the click of a button — especially younger adults, who tend to be heavier and more prolific users of social networking sites.

The FTC has issued subpoenas to several social media platforms — including Meta, TikTok, and YouTube — seeking information on how these companies screen for harmful and malicious ads and scams.

Implement new policies

California lawmakers are considering a bill that would offer older adults better protection against fraud by holding banks accountable when tellers facilitate fraudulent transactions.

In the UK, former Home Secretary Suella Braverman presented a fraud strategy to parliament in May 2023, proposing various measures such as banning all calls related to financial products.

We see these two bills as a move in the right direction, but more work is needed and urgently. Policymakers need to allocate funding to research and law enforcement, introduce laws that provide greater protection for people, and cooperate with international law enforcement agencies such as Interpol.

Fraud affects society at all levels: individuals, organizations and governments. We’re all in it together whether we like it or not.