The growth of Artificial Intelligence (AI) has emerged as one of the most impactful developments
in recent decades. Technologies like ChatGPT, Gemini and Claud have made AI pervasive, driving real-time changes across multiple industries, including finance and marketing. For a number of years, companies specializing in fraud prevention have used AI to bolster their defenses against the escalating risks of online fraud. These systems excel by analyzing complex data and detecting trends and patterns that might go unnoticed by humans, resulting in remarkable outcomes.
As AI tools have become more accessible to the public, they have increasingly posed a dual threat in fraud prevention. Criminals have begun harnessing these tools’ powerful capabilities for illegal purposes. This alarming trend raises broader concerns about the potential for AI misuse and highlights the urgent need for protective measures.
PUTTING THE BEST FOOT FORWARD
Within the US, the issue has already generated considerable discussion, especially following the introduction of a Blueprint for an AI Bill of Rights in October 2022. The idea of imposing tighter regulations on AI is sensible. However, regulating areas of rapid technological advancement always presents significant challenges. The risk of unintended consequences from well-intentioned policies is real, making it essential to thoroughly evaluate the Blueprint and its potential impact on fraud prevention. Ideally, these new regulations would restrict the ability of malicious actors, such as online fraudsters, to exploit AI tools to harm others.
Without closer examination, it’s difficult to determine if this will indeed be the case. This uncertainty stems from the concern that these regulations might also impede well-intentioned developers from enhancing and adapting AI technologies to combat the alarming rise in online fraud. Herein lies the risk of the unintended consequences mentioned earlier. Given the rapid pace at which AI technology evolves, we have very little margin for error in managing and regulating it – getting it right from the outset is important.
ASSESSING THE BLUEPRINT FOR AN AI BILL OF RIGHTS
Released in October 2022, the Blueprint for an AI Bill of Rights serves as a non-binding guide for the ethical use of AI. Its purpose is to outline consumer rights, granting individuals some control over the autonomous tools and decisions being made on their behalf. Since its release, at least five federal agencies in the United States have adopted the Blueprint, and in July 2023, seven major AI companies, including Google, OpenAI and Microsoft, voluntarily embraced its principles.
The comprehensive framework is designed to ensure that AI systems are developed and implemented in ways that protect the public from the potential risks associated with these technologies. To this end, a key focus of the Blueprint is on creating safe and reliable systems. Specifically, it emphasizes the need for thorough pre-deployment testing, continuous monitoring and compliance with industry-specific standards to prevent AI systems from being exploited for harmful activities like fraud.
Moreover, the Blueprint advocates for ongoing risk identification and mitigation, as well as independent evaluation of AI systems, including those that could be exploited for illicit activities. This proactive approach to preventing AI-assisted crime is commendable. The safeguards outlined in the Blueprint could undoubtedly play a crucial role in curbing the spread of harmful activities. Simultaneously, there are other areas where its impact might be more nuanced and less straightforward.
THE CHALLENGE OF UNINTENDED CONSEQUENCES
A potential challenge arises in how the Blueprint addresses data privacy and the limitations it places on data reuse in sensitive domains. Currently, many fraud prevention tools rely on sophisticated AI algorithms that require rapid analysis of large volumes of data to detect fraudulent activity. If the Blueprint restricts access to this data and makes it more difficult for companies to develop these systems.
As previously mentioned, the power of AI-assisted fraud prevention solutions often exceeds what has previously been possible. Limiting the ability of companies who build these solutions to access or leverage the data needed to ensure they’re operating as effectively as possible could have harmful consequences. Without the right approach, we could inadvertently create a scenario where the supply of these systems is hindered. In turn, this would mean fraudsters would find themselves battling against severely weakened systems, which could lead to online fraud becoming more prevalent in the long-term.
Additionally, the requirements for independent evaluation and reporting of AI solutions could introduce delays and increase the costs associated with developing AI-assisted fraud prevention tools. This, in turn, could hinder innovation in the field, ultimately benefiting fraudsters. As online fraud rates escalate and economic challenges intensify, businesses across the US and beyond need access to these solutions in the most time- and cost-effective manner possible, so this scenario must be avoided.
HELP OR HINDRANCE?
It’s too early to determine whether these concerns will materialize. As with most regulations of the scale of the Blueprint, fully assessing its impact at this early stage of implementation is challenging. The issues surrounding these measures highlight the very real threat of overregulation, which could stifle the development of innovative AI tools essential for long-term fraud prevention.
To ensure AI development remains a positive force in the domain of fraud prevention, we must remain vigilant and outspoken about this threat. It is crucial that any measures introduced remain flexible and adaptive, and that the channels of communication between regulators and those working in the public’s interest are both clear and precise. With the policy still in its nascent phase, now is the time to voice these concerns and find solutions.
About the Author
Tamas Kadar is the founder and CEO of SEON. He started the company with his co-founder when they were still students in university and built it from scratch.. He has been featured in Forbes’ ‘Hottest Young Startups in Europe’ and is a regular startup pitch winner. He’s a true tech enthusiast’s product visionary for creating a fraud-free world and has recently been included in the elite Forbes 30 Under 30 Europe list as the face of the technology list.
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