The rapid advancement of artificial intelligence (AI) technology brings numerous advantages, but unfortunately, it also provides an avenue for malicious actors to engage in AI scams that target unsuspecting Americans.
A recent Freedom of Information Act request to the Federal Trade Commission highlighted just how pervasive these AI-driven scams have become, illustrating the tremendous impact on American consumers.
Crucial Insights into AI Scams
- Throughout the past year, over $108 million was lost to AI scams in America.
- A staggering 45% of these scams led to financial losses, with individuals typically losing around $14,600 on average.
- The largest financial hits were seen in investment scams ($67 million), followed by impersonation scams ($16 million) and job-related scams ($3.4 million).
Alarmingly, 45% of AI-related scams result in financial losses, a sharp contrast to the 28% average loss rate seen across all scam types in 2023. AI technologies such as deep fakes and voice imitation bolster the credibility of these scams, explaining their higher success rates.
The Escalating Pattern of AI Scams Over Time
The occurrence of AI scams has been increasing steadily throughout 2023, peaking in July 2024, where reports doubled compared to the previous year and nearly $13 million was lost solely in that month.
Exploring AI Scams Across Different Categories
| Category | $ Loss (AI) | % Of Reports With Losses (AI) | Average $ Loss (AI) | % Of Reports (AI) | % Of Reports (Total) |
|---|---|---|---|---|---|
| Investment Related | $66,941,915 | 73.7% | $54,691 | 15.3% | 2.0% |
| Imposter Scams | $16,049,096 | 32.8% | $16,033 | 12.5% | 15.8% |
| Business and Job Opportunities | $3,400,903 | 34.6% | $10,762 | 3.9% | 2.0% |
Undoubtedly, the costliest AI scams are investment-related, with 74% of individuals reporting losses, averaging just below $55,000. Imposter scams take the second spot, burdening Americans with over $16 million in financial damage. Notably, business imposters and romance scams within this category are especially pricey, each exceeding $5 million in losses.
Meanwhile, the most frequent form of AI scams involves online shopping and negative review scams, of which 80% result in financial downfalls. Nevertheless, the typical loss in these cases is lower, averaging just below $900.
AI Scam Victims Across Age Demographics
Let’s delve into age-related insights:
| Age Range | % Of AI Scam Reports | % Of Total Scam Reports | Average $ Loss (AI) | Average $ Loss (Total) | % Of Total Losses (AI) | % Of Total Losses (Total) |
|---|---|---|---|---|---|---|
| 19 and Under | 2.3% | 2.6% | $478 | $3,867 | 0.1% | 1.1% |
| 20 – 29 | 14.4% | 14.0% | $2,540 | $6,477 | 2.1% | 9.0% |
| 30 – 39 | 19.6% | 17.9% | $9,972 | $10,421 | 11.0% | 16.7% |
Individuals in the 30-39 age bracket are most frequently targeted by AI scams, echoing the pattern observed in overall scam data. However, these consumers are less financially affected, as their losses contribute just 11% of the total money lost, against an average of 17%.
Furthermore, older demographics, particularly those over 60, report fewer AI scam interactions, perhaps due to less engagement with online platforms. Yet, when these consumers do fall prey to scams, the financial repercussions are hefty, averaging over $27,000 for those between 50 to 79 years old.
Mark Webster, Co-Founder of Authority Hacker, provides valuable advice on avoiding AI scams:
AI has been great for so many things and I use it for everything from meal planning to maximizing efficiency in my business. But I’ve also become increasingly more aware of the dark side of AI.
Scams utilizing AI can be tricky to detect due to the authentic appearance of the technology. They vary from voice cloning to deep fakes on social media. To safeguard yourself, always question unexpected messages and offers that seem overly enticing or suspicious. When in doubt, verify information by reaching out to businesses through official channels, or if contacted by a loved one regarding urgent matters or finances, use a pre-established safe word to ensure authenticity.
Mark Webster
Authority Hacker
This analysis stems from a FOIA request submitted to the Federal Trade Commission, seeking details about incidents involving artificial intelligence. The FTC provided data from January 1, 2023, to July 31, 2024. While the analysis chiefly focuses on data from August 1, 2023, to July 31, 2024, which spans a year, the wider timeline allowed for a broader view of trends. The reported financial figures are averages derived from incidents reporting monetary losses, and age-related data was extracted from reports including age, representing 68% of the total submissions. Insights about broader scams patterns were sourced from the Consumer Sentinel Network Data Book 2023.
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