Fraud 3.0: when AI can mimic the CEO’s voice

    Monday, 20 January 2020
    In 2018, there were an estimate 20,000 cases of “CEO fraud” around the world, resulting in losses totalling €1.2 billion.

    We had been waiting for this for months: the first case of CEO fraud using software to mimic the human voice has now occurred.

    The technology is even available over the Internet for a few hundred dollars. Our experts have been witnessing the increasing sophistication of this type of fraudulent activity for years now.

    Initially, it involved no more than an email whose authenticity nobody thought to verify. Later, the fraudsters gradually became more confident, increasing their technical expertise and ingenuity.

    Some criminals no longer hesitate to pretend being company employees, such as members of an internal team responsible for combating fraud. Believing it to be an exercise, the employees contacted obey the instructions they are given and end up by making a very real fund transfer.

    A few months ago, a German company in the energy sector was faced with a highly unusual case of fraud: it involved using the voice of its CEO as reproduced by artificial intelligence software based on automated, or “machine” learning to mislead the head of a UK subsidiary.

    He began by making an initial transfer of $220,000. The fraud might well have continued if the fake CEO had not been unlucky enough to call his victim at the same time as the real CEO… In the end, the German company succeeded in getting its money back because it had taken out fraud insurance as a precaution.

    A new dimension for fraud

    Looking beyond such technical exploits, one fact is self-evident: the combat against fraud has taken on a new dimension. It will soon be possible to fake to perfection any image, video or voice. And soon we will no longer be able to rely on our five senses.

    How will trust be possible in future? Last April, an FBI report estimated the number of cases of “CEO fraud” recorded around the world in 2018 at 20,000, resulting in prejudice totalling €1.2 billion. It is the costliest type of Internet scam. Over the period 2013-2018, declared losses totalled $12.5 billion. There is a risk that such losses will rocket upwards in years to come, making this type of fraud a strategic issue for many companies.

    It is high time that we became more aware that fraud, and more generally the issue of trust in business dealings, will become central in a context of rising political tensions. That is why the answer must involve a race for innovative technology to counter fraudsters, as well as support and protection for those who trust their business partners.

    Wilfried Verstraete is President and Chairman of the Board of Management of the Euler Hermes Group. Euler Hermes is the global leader in Trade Credit Insurance and part of the Allianz Group.