June 15, 2024

New reports suggest that scammers are enhancing their techniques by employing technologies like artificial intelligence to escalate their attacks on modest merchants. As highlighted by The Wall Street Journal (WSJ) recently, several online businesses have been lamenting the loss of patronage to scammers who exploit the sellers’ promotional materials and digital contents to deceive their customers into buying inferior or counterfeit versions of their products, or sometimes to swindle them.

Alastair Gray, in his role as the director of anticounterfeiting for the International Trademark Association, tells WSJ that criminals have found it easier to replicate existing businesses online.

While technologies have greatly aided small businesses in reaching global markets, it’s also been a boon for fraudsters. They use AI tools to perfect their scams, eliminating language or spelling mistakes that might give them away.

Corporations like Amazon and Meta can effectively block deceptive ads, counterfeit commodities, or suspicious accounts. However, smaller enterprises don’t have the same resources, according to Thomas Moga, a Michigan patent attorney. These small businesses tend to suffer a considerable disadvantage when combating such frauds.

There was news last month about a crooked network consisting of more than 75,000 bogus ecommerce stores that defrauded over 800,000 shoppers in Europe and the US. This type of fraud, known as “triangulation fraud,” takes advantage of the interconnected nature of global ecommerce platforms, putting both businesses and customers in jeopardy.

The harmful impacts of such sophisticated scams can be dire for businesses. It can result in a swell of chargebacks that can harm a company’s revenue and reputation, and potentially even their relationships with payment processors.

Mike Lemberger, Visa’s chief risk officer for the North American region, discussed the rising threat of such scams with PYMNTS. He disclosed that criminals utilize tools to automate their fraudulent activities. In contrast to larger businesses with internal resources to ward off scams, smaller businesses usually have less sophisticated defenses.

Related FAQs

What function does artificial intelligence perform in the scamming process?

Artificial intelligence helps scammers automate the process and eliminate language or spelling mistakes that could indicate a scam, making the counterfeit sites appear more legitimate.

What is “triangulation fraud”?

Triangulation fraud is a complex scam method that leverages the interconnectedness of global eCommerce platforms to exploit businesses and consumers who run the risk of having their identity stolen as well as being scammed.

Why are smaller businesses at a disadvantage when dealing with scams?

Smaller businesses generally do not have the internal resources or capabilities to monitor and block misleading ads, fake accounts, or counterfeit goods effectively. This makes them more susceptible to scams.