Artificial intelligence (AI) has become one of the most disruptive forces of our time. From how we work to how we protect sensitive information, AI’s influence is being felt across nearly every industry. Fraud investigation is no exception.
While AI gives fraudsters new ways to scam victims with alarming sophistication, it also equips fraud investigators with powerful tools to detect and prevent fraud. Understanding both sides of the equation is critical for staying ahead of evolving schemes.
How Fraudsters Are Using AI
Fraudsters are quick to adopt new technologies, and AI has opened the door to schemes that are more convincing — and more damaging — than ever before.
In a recent public service announcement, the FBI highlighted several ways scammers are leveraging AI:
- Flawless communication. AI corrects grammar, spelling and syntax issues that used to give away scam emails.
- Language translation. Non-native speakers can now produce polished English communications, making international scams harder to spot.
- Authentic-looking documents. Fake IDs, passports and other documents are being generated with alarming realism.
- Fake social media profiles. AI-created images and videos create identities that look real, and often pressure others to send money.
- Voice impersonations. With only a short voicemail clip, fraudsters can generate audio that mimics the voice of a boss, customer or coworker to pressure victims into sending money.
These tactics are driving record losses. According to an article by Fortune, consumers reported more than $10 billion in fraud losses in 2023, a 14% jump from the previous year. Experts warn that losses could rise to $40 billion in the U.S. by 2027.
AI-Driven Fraud Schemes On the Rise
Several schemes have grown in frequency thanks to AI advancements, according to the Association of Fraud Examiners.
- Pig butchering scams. Fraudsters build a personal rapport online with a target using AI-generated photos and profiles. These scammers then present a sudden need for a significant amount of money for an alleged emergency or investment opportunity.
- Synthetic identity fraud. AI blends real and fake personal data to create entirely new identities, complete with fabricated credit histories and employment records.
- Business email compromise. Scammers now use AI-generated audio or video to impersonate executives and trick employees into wiring funds or buying gift cards.
- Government impersonations. Fraudsters use AI-driven phone calls to pose as IRS agents or other officials, exploiting fear of noncompliance.
How Investigators Are Fighting Back With AI
Thankfully, AI isn’t just a tool for fraudsters — it’s also being used in fraud prevention and investigation.
Smarter Document Review
AI solutions can potentially scan bank statements, paystubs and identification documents for anomalies that a human reviewer might overlook. This accelerates investigations and improves accuracy.
Corporate Success Stories
Large institutions are already seeing results. For example:
- VISA rolled out an AI system that analyzes spending patterns to flag suspicious transactions. The program creates a profile of the credit card user by analyzing the user’s spending habits. Purchases made by the card that don’t fit the profile of the card holder are then flagged as potential fraudulent transactions. The program is capable of adapting to new data, meaning that it should be able to respond quickly to changing fraud trends. One European bank reported a 90% drop in damages from phishing scams after adopting the program.
- Google announced AI-powered scam detection on Android phones in 2025. The feature will scan incoming texts and warn users if it believes the text may be from a scammer. Its Chrome browser already uses AI to block phishing attempts and detect malicious downloads. The browser relies on AI models that are trained in recognizing the patterns of malicious websites and can identify URLs impersonating those of trusted institutions.
Real-Time Monitoring and Improved Fraud Detection
AI tools can scan massive data sets, monitor transactions in real time and detect unusual behavior patterns instantly. For internal auditors, this means less time spent on manual testing and faster detection of fraudulent activity — often before losses escalate.
The Bottom Line
AI is a double-edged sword. It’s driving both the sophistication of fraud schemes and the effectiveness of fraud detection tools.
For fraud investigators and business owners alike, the takeaway is clear: ignoring AI is not an option. Understanding how it is used, both for harm and for protection, is essential to staying ahead in the fight against fraud.
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