Rise of AI-based scams (Poll Inside)


Wary while surfing: Incidences of AI-related scams are rising globally, while most reported scams locally are still of pyramid-based schemes.

PETALING JAYA: Operators of dubious investment schemes are exploiting the buzz around artificial intelligence (AI), using it as a tempting facade to entice victims.

The new wave of fraud is being promoted by these operators, who claim their AI-backed schemes are almost fail-proof and a sure-fire way of making profits.

ALSO READ: Experts: AI still unable to fully imitate human ability to create $$$

Raymon Ram (pic), a criminologist who specialises in the field of financial forensics, said that with AI appearing as a symbol of advanced capability and promise, unscrupulous individuals are exploiting it to gain the trust of the public.

“We have seen AI-driven chatbots that are designed to replicate genuine human interactions and make scams appear more authentic.

“Then there are technologies such as deepfakes, which can craft extremely realistic videos and be misused to show prominent businessmen and celebrities supposedly endorsing these investment schemes.

“The sophistication of AI applications is groundbreaking, but unfortunately, it has become a tool in the arsenal of fraudsters in Malaysia and globally in the current era,” he told The Star.

Ram said that while there are legitimate platforms using AI to help analyse market patterns and offer insights, it is unrealistic to expect it to consistently pick stocks that yield high returns.

He said AI can process vast amounts of data and discern patterns, but the stock market’s movement is influenced by various factors that are often unpredictable and swayed by speculation.

According to Ram, there is no such thing as guaranteed high-yielding returns without risk. Even the most sophisticated AI system requires human oversight, especially when the stock market is influenced as much by emotion and sentiment as by data.

The certified fraud examiner, who runs a company that specialises in financial forensics, fraud risk management and compliance, said ventures that are regulated often provide balanced perspectives on the capabilities and limitations of AI and explain its processes in understandable terms.

Ram warns that potential investors should be cautious when the projected returns of a scheme seem excessively high with little to no risk.

“It is a glaring red flag, and so are ambiguous technical jargons where complicated technical terms are used as a way to befuddle potential investors.

“They also put pressure on their investors to place their funds in the scheme. If this happens, step back and reconsider.

“Always verify the company’s credentials. Malaysia has financial regulatory bodies where one can seek such verification to avoid being deceived.

“Also, be wary of suspicious payment modes. When requests for payments in cryptocurrencies or unconventional channels are made, they should be treated with suspicion as they lean towards a deceptive scheme,” he said.

AI trading uses computer algorithms and software to analyse market data and trends.

It is said that AI trading can inform the trader of buying and selling points, analyse price data, come up with insights on volume, liquidity and others, as well as derive entry and exit strategies.

Advertisements flooding social media on purported crypto arbitrage trading, which uses AI bots, claimed all it takes is “seven clicks to set AI bots to do arbitrage trading” for the trader.

On YouTube, there are a handful of videos informing users on how to set up a bot for trading.

Meanwhile, a forex trading robot, also known as an expert adviser robot (EA robot), is a programme designed to help traders by providing signals about when to buy or sell a specific currency.

Checks on popular ecommerce websites showed EA robots are being sold from as low as RM11 to up to RM100.

Criminologist Datuk Dr P. Sundramoorthy of Universiti Sains Malaysia’s Centre for Policy Research said while AI can assist in stock analysis, it is vital to recognise that it cannot guarantee accurate predictions due to the volatility of the equity market.

He said, from observation, that those most susceptible to subscribing to such dubious schemes are young adults with plans to settle down and dreams of owning luxury houses and big cars.

The other layer of society prone to being drawn in are retirees who are hopeful of receiving an income monthly by investing the funds they have in their savings, he added.

While the new trend of AI-related investment scams is picking up steam globally, police sources said there have been very few AI-related scams reported.

Instead, the majority of investment scams that Malaysians have fallen for are pyramid-based schemes.

The police commercial crimes investigations department says it will strive to disseminate messages of awareness regarding AI-related scams to ensure public safety.

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