Unchecked AI Will Cost Us Billions: The FTC Can Help
COMMENTARY
In a rapidly digitizing world, it is nearly impossible to keep pace with the seemingly endless stream of technological innovation. Unfortunately, the most nefarious individuals within society understand some will struggle to keep up with newly presented risks and target their insidious attacks on those most vulnerable. Such a landscape is rife with deceptive opportunity — and scammers are capitalizing on the moment in a way that could have a catastrophic impact on the financial well-being of disadvantaged communities if policymakers don’t step up to address it.
In February 2023, consumers across the country reported losses totaling nearly $8.8 billion to fraud in 2022. That is a 30% increase from 2021 fraud losses. Losses to investment scams more than doubled to $3.8 billion. Scams from business imposters soared to $660 million. Scams initiated by contact over social media led to the largest overall reported losses at $1.2 million. Across the board, fraud is escalating.
Unfortunately, the increased incidence of scams is disproportionately affecting older Americans. For individuals between the ages of 20 and 59, the median amount lost to scam is $500 — this skyrockets to an average of $1,500 per scam for individuals over the age of 80. Often, scam artists target elderly individuals because of their decreased fluency of the technological landscape compared with younger Americans. Beyond age demographics, according to the Federal Trade Commission’s Serving Communities of Color report, “predominantly Black communities filed consumer reports at a higher rate than predominantly White or Latino communities.” Put simply, the most vulnerable are, unfortunately, the most at risk.
That’s why, while I am excited about the potential for AI to revolutionize our economy, I am fearful of the ramifications it will have on millions of consumers nationwide. With scams already on the rise, I am concerned about how this hyper-sophisticated technology can be used against Americans who are already struggling to achieve financial security.
Amid merely the dawn of AI innovation, we’ve already seen criminals manipulate the technology as a tool for deceit. Earlier this year, Canadian officials announced that one man had used artificial voice generation cloned from public social media profiles to scam eight senior citizens out of $200,000 in only three days. Perhaps most frightening is the fact that the deepfake videos and cloned soundbites generated are often so realistic that humans cannot detect the difference between reality and AI.
I am not alone in my concern. In fact, up to 84% of Americans are concerned that AI will be used for criminal activity, spreading false information, radicalizing individuals and inciting hate and harassment.
In this time of uncertainty, Americans require robust leadership from the FTC as we chart the unfamiliar terrain of AI innovation. Specifically, FTC commissioners must expend their resources on the most pertinent issue of the day — rising consumer fraud. The FTC must recommit to its most central mandate of protecting consumers. Lacking such a focus could harm millions of Americans who would suffer unfathomable consequences at the hands of scammers capitalizing on new, misunderstood technology.
What concerns me is a potential lack of focus on day-to-day issues impacting the American consumer currently permeating FTC culture. Under Chair Lina Khan’s tenure, she’s pursued a broad mandate, seemingly prioritizing antitrust cases. I appreciate her approach and understand the ramifications that a corrupt merger market can have on the lives of citizens nationwide; however, these are not the most pressing issues facing Americans. In pursuing antitrust cases, Khan has grouped consumers together into one static monolith. The key to vigorous FTC leadership is to recognize that the body of consumerism is made up of individuals who require case-by-case attention. That approach renders proactive action from the commission.
Those who are financially vulnerable can’t afford to be the victims of fraud, especially as inflation inflicts added strain on consumers’ checkbooks. A single fraud scam can be financially devastating for an individual, and we have already witnessed record levels of fraud last year alone. Amid the proliferation of AI technologies, these losses will surely skyrocket. Fraud schemes are one of the most pressing issues impacting the livelihoods of American consumers nationwide. As such, the FTC must prioritize the very real threats posed by emerging technologies, rather than pursuing an agenda wholly distant to the everyday needs of American consumers.
While I appreciate all that the FTC has done and plans to do for the well-being of consumers, now is not the time to revolutionize the mandate and adopt a broader view on what constitutes American financial well-being. If anything, now is the time to narrow the commission’s focus to the very real threat of fraud — the bread and butter of the FTC — and do the upmost to protect consumers from scams.
To help with oversight efforts and the protection of consumers, I encourage the FTC to solicit input from community stakeholders. It’s vitally important to understand the views of industry experts on the opportunities and pitfalls that AI presents for consumers.
When leveraged properly, AI will be an incredible tool that will revolutionize every aspect of daily life. We can — and will — achieve that reality with the robust, focused defense of the FTC.
Kevin B. Kimble, Esq. is the founder and CEO of the Financial Services Innovation Coalition. He can be reached on LinkedIn.
