Startups Harness AI to Combat the Growing Financial Impact of Digital Scams on Americans

Brian Roundtree’s parents, Vern and Mary Roundtree, were deceived by scammers who impersonated one of their grandchildren. Roundtree, a Seattle entrepreneur, initiated aiShield to help thwart criminals from exploiting older adults through digital frauds. (Photo courtesy of Brian Roundtree)

This was a scam you might have heard of.

A caller pretended to be a relative in distress — specifically, a grandson involved in a car accident in Cuba who needed $34,000 for medical expenses and to secure his release from jail.

Brian Roundtree’s parents intended to support their supposed grandson. They wired the money. Family members became aware of the scam and attempted to reverse the transaction, but it was already too late.

“My parents, they didn’t report any of their losses just out of embarrassment,” said Roundtree, a Seattle startup veteran working on a new venture to combat fraud.

Reported losses from scams and frauds like this amounted to $10 billion last year, as per the U.S. Federal Trade Commission. The figures keep rising and may even be over ten times higher, experts suggest, as many victims remain silent about the crimes. A report released this month indicated that 1 in 10 U.S. adults surveyed reported losing money to a digital scam or cyber attack.

“We are in the midst of a fraud crisis in this country,” said Kathy Stokes, director of Fraud Prevention Programs at AARP.

And it’s almost certain to deteriorate further as artificial intelligence and generative AI technologies simplify impersonating loved ones in need, financial institutions, or tech support companies seeking money or personal information.

“They have the tactic. And the tactic is a contact out of the blue that puts you into a heightened state and carries urgency,” Stokes said. “Our brains permit logic bypassing when we’re thrust into fight or flight mode.”

Intelligent, rational individuals feel panic and make decisions they typically wouldn’t. While anyone can be a target, Stokes noted that older adults often fall victim as they are more likely to answer their phone, are alone and thus more persuadable, and typically maintain a larger bank balance susceptible to exploitation.

The issue spans the globe, Stokes mentioned.

AiShield co-founders Brian Roundtree (left), CEO and chief product officer, and Kevin Allan, chief technology officer. (aiShield Photos)

Law enforcement and policymakers are beginning to provide more attention, and a nonprofit is soon launching to help trace victims and identify repeat offenders to enable prosecutions. Public education initiatives persist in trying to elevate awareness.

An increasing number of startups are developing innovative technological tools to shield people and impede the crimes.

Roundtree, a serial entrepreneur from Seattle, is among those founders. After the incident with his parents, Roundtree and Kevin Allan last year co-founded aiShield, a startup employing generative AI to intercept and detect fraudulent calls to cell phones and uncover calls revealing sensitive information. Their service is mainly oriented towards older adults.

AiShield will screen incoming calls, inquiring an unknown caller to identify themselves and state their reason for calling. That information is conveyed to the customer, who can decide whether to answer.

However, scammers also reach victims by email or text and evade detection. They’ll direct the person to call a number to provide credit card or bank credentials.

Thus, aiShield will also monitor outgoing calls, listening for instructions concerning money transfers and similar activities. If red-flag phrases are identified, the service intervenes, employing generative AI to alert the customer and inform the caller that the conversation is under surveillance.

The startup intends to operate as a mobile virtual network operator (MVNO), utilizing the cell network of a carrier like Verizon or T-Mobile while providing its own service.

Roundtree and Allan have previously co-founded autoGraph, a startup enabling consumers to tailor their profile for advertisers. They also collaborated at SNAPin Software, a telecom software company founded by Roundtree and was acquired by Nuance for approximately $180 million in 2008. Nuance was later acquired by Microsoft.

AiShield has developed proof-of-concept technology. It is comprised of four employees and is self-funded but is seeking capital from angel investors. Within about 12 months, Roundtree aims to have a product ready for customer trials.

“Everyone knows somebody that has been scammed,” Roundtree said. “It’s a personal mission, just wanting to make a difference.”

There are numerous anti-fraud companies serving corporate clients, though fewer concentrate on consumers. These include companies targeting scam prevention and identity-theft protection like Aura, Robokiller, and fellow Seattle startup Hiya, among others.

Stokes is optimistic that awareness and concern have finally reached a point where people aren’t blaming the victims, and real progress is forthcoming. The White House conducted two roundtables with the National Security Council this year to tackle the issue, she stated, which needs to be treated like other property and violent crimes.

“This is a huge problem. It is a crime,” Stokes said. “People’s lives are being destroyed.”

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