ASIC using AI to manage scams

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Biz Blocks by Michael Bacina, Partner Piper Alderman Lawyers | Sep 12/2020

ASIC has announced in the ASIC Corporate Plan 2020-24 (Focus 2020-21) that a new nation-wide ASIC working group has been set up to disrupt and deter scams such as cyber misconduct and crypto-related scams in the COVID-19 environment.

The new ASIC-wide working group is using AI powered tools to conduct environmental scans and monitoring ASIC data access points to collect and analyse intelligence such as from advertising on social media and reports of unlicensed behaviour.

This comes after the proliferation of scams on Youtube, COVID-19 vaccine scams and digital currency scams where investors are asked to sign up to digital currency trading accounts that displayed fake profits for the account holders that were never able to be withdrawn.

ASIC also reported on an increase of scams during the COVID-19 pandemic:

“There has also been a marked increase in scams, false or misleading advertising (particularly targeting retail investors), and reports of unlicensed financial advice. The number of reports of misconduct we received between April and June 2020 was 20% higher than for the same period in the previous year.

Enforcement activities are focusing on the most egregious misconduct harming vulnerable consumers, the sale of harmful products and the provision of poor advice to consumers affected by pandemic-related investment losses or hardship.

ASIC stated that:

“We remain committed to our ‘Why not litigate?’ discipline to seek court-based outcomes against wrongdoers.”

This echos the ACCC report reporting that Australians lost over $21.6 million in digital currency scams in 2019. During that time scammers used platforms such as Facebook, Instagram, Discord and Telegram to promote ‘get rich quick‘ digital currency investment scams and often using fake celebrity endorsements such as mining billionaire Andrew Forrest.

ASIC’s participation in numerous inter-agency forums to address the risks of breaches and misconduct including the Senior Officers Fraud Forum and Serious Financial Crimes Taskforce will likely see an increase in the sophistication of tools deployed by ASIC to manage and attack all online scams in the future. In the never ending game of whack a mole, it’s good to see the regulators upgrading their hammers.