Generative artificial intelligence technology is enabling scammers to quickly and easily create fraudulent companies, a top concern for the business-to-business market, according to a recently published report.
The "Combatting Business-To-Business Fraud: Benchmarking Report," created by the Association of Certified Fraud Examiners and Thomson Reuters, revealed that "synthetic business identities" and potential fines or regulatory action are the two most significant fraud-related risks for businesses looking to build relationships with new news vendors or customers.
The report revealed that more than 60% of businesses surveyed stated it is either moderately or extremely challenging to onboard new vendors. Only 10% of companies reported it was "not challenging at all." Additionally, 60% said bringing on a new business customer is extremely or moderately challenging.
The businesses surveyed cited fraud as a leading concern, an issue that has been exacerbated due to generative AI, which allows scammers to easily create fake companies.
Vice President of Thomson Reuters Risk & Fraud Solutions Dori Buckethal told FOX Business, "Organized crime rings are sophisticated and typically they're ahead of the curve on the adoption of any new technology."
"What we're seeing with synthetic identity at fictitious businesses is that generative AI and machine learning can replace what was once done with a very manual process within criminal organizations," Buckethal added.
"So in the past and even today, there are a large number of people sitting in call centers conducting this type of fraud," she continued. "And just like we're hearing in corporations, those people can be replaced with technology to do it at a faster rate and accelerate the pace at which they're attacking businesses."
According to Buckethal, "fraud is big business" in the business-to-business market, accounting for "billions of billions of lost revenue each year."
She noted that ACFE reported that "5% of business revenues are lost to fraud each year."
While scammers are utilizing generative AI to commit fraud, businesses are adopting it to detect potential fraud.
The ACFE and Thomson Reuters' report stated that more than half of the businesses surveyed noted that they plan to utilize AI and machine learning in their vetting and due diligence processes when onboarding new vendors and customers.
Buckethal told FOX Business that while implementing AI into a company's due diligence process will likely reduce the need for compliance staff, she recommends businesses use those savings to invest in developing technologies to safeguard their company from fraudsters.
"The technology isn't slowing down, so they shouldn't do this as a cost-cutting method and should be investing more in their risk and compliance teams," Buckethal said. "Criminals are thinking like CFOs, and business leaders need to think like criminals to understand where to invest in technology and resources."
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