Patience, Skepticism and Caution: Three Timeless Tools to Counter AI Hype and Scams

Apparently, it is the best of times and the worst of times when it comes to AI. The best, because it seems each week we read about some cool new thing an inventive company is doing with generative artificial intelligence technology to improve quality of life for ill or impaired people. And the worst, because it seems each week we read about some horrid new thing scammers are doing with generative AI to rip people off. The latter, predictably, gets the most attention, and all investors should be aware of the latest tricks. Yet the former is a reminder that technology isn’t inherently good or evil, and despite AI’s nefarious uses, there are benefits and opportunities for investors. It all points to keeping a measured view.

We would love to focus on the good parts here, but for now, the bad parts are most important, because people risk losing a lot of money if caught unaware—risks detailed very well by an extensive Bloomberg report this summer.^[i] The new tricks mainly involve so-called deepfakes, where bad apples use generative AI to clone people’s voices and images. One is an evolution of a widespread scheme where criminals send a text or email purporting to be from a loved one in trouble and in need of money in a pinch. Now, scammers can plug an audio clip into a program that can synthesize the voice to create an entirely new message—audio they can easily rip from social media or hacked voicemails. You could get a call that sounds like a child, grandchild or other loved one in distress, making it vital to keep your cool, ask questions only that individual could know the answer to, and not let the purported urgency override your skepticism and defenses.

Investment frauds are also getting more sophisticated thanks to deepfakes. A big one made headlines in the UK recently for using deepfake videos of Elon Musk and a popular BBC presenter to hoodwink investors. In the promotional clip, British Antiques Roadshow host Fiona Bruce appears to be reporting that Musk has developed new trading software that will generate huge windfalls, and it then cuts to a video of Musk apparently boasting users can reap £5,700 daily from his new program, which happens to pick the correct stocks 91% of the time.^[ii] It is like a newfangled version of the old Moneytron scam from the late 1980s, and using the standard tools for sniffing out fraud would easily reveal the game. But to use those tools, people would have to get past the inclusion of Bruce and Musk, which seems designed to make otherwise credulous people let their guard down. Lesson: Seeming celebrity endorsements aren’t a sign of an investment’s validity.^[iii]

Yet there is a silver lining: AI is also assisting the battle against scams. For instance, according to Bloomberg, scammers are using image-generating AI and 3D printing to create fake IDs, which they then use to open accounts in their victims’ names—next-level identity theft. Yet there are now AI-powered programs banks can use to verify IDs and root out fakes.^[iv] AI technology is also improving the systems that detect suspicious transactions. Some of it is a little creepy, like tracking if the user’s computer mouse behaved unusually for them. Some of it is less so, like using machine learning to compare a transaction to the user’s historical patterns. In both cases, it happens so quickly that the company can block the transaction. Not foolproof, but encouraging.

So what can you do to reduce your risk? All the normal things. Watch your bank and credit card accounts and statements like a hawk. Employ credit monitoring (or even a freeze, if you think it is most beneficial for you). Establish code words your family and loved ones will need to use if they are actually calling you in a legitimate pinch. Remember investments that sound too good to be true usually are. If you see what looks like a good investment opportunity in the “sponsored results” on your search engine of choice, be skeptical. If you are interested, do independent research to make sure it is real—no matter how glossy the website and purported return history are. Don’t give custody of your money to anyone in things like commingled accounts.

And again, take heart, because AI is also bringing some good things. Over the summer, Financial Times columnist Patti Waldmeir introduced readers to her friend “Pearl,” which is the AI-supported insulin pump that constantly adjusts and regulates the dose. “She controls my blood glucose better than I can myself, partly by predicting when it is set to shoot up or plummet, and taking action — even if I am asleep. Without her, I have to make dozens of dosing decisions a day, each with potentially life-threatening consequences.”^[v] As she goes on to report, the US National Institute on Aging is funding a boodle of AI-powered projects aimed at detecting cognitive impairment and sending early warning signals regarding those at risk of falling or fainting. And in another cool story, Stanford researchers successfully implanted tiny chips into a voiceless woman’s brain, trained an algorithm to recognize the signals her brain sent when she wanted to talk, and converted it all into text at 62 words per minute.^[vi] While we admittedly wig out a bit at the thought of turning into the Borg, this is still amazing.

Lesson the second: Often the big long-term winners from new technology aren’t those who develop the tech at the root of it, in this case, generative AI. Rather, they are the creative users who deploy the technology to do new things, solve problems and make life better—reaping profits and generating earnings for investors along the way. We aren’t arguing any of the developments profiled here will be the big investments of tomorrow. Far-future winners are always unpredictable. But they are emblematic of how these trends typically, gradually unfold.

And they are a reminder that while AI brings challenges, it also brings opportunities.