Last year, after giving birth, I hired a postpartum doula to help me. After trying out a few different doulas, I found one who I've been working with for over a year now. She helps me with housework and childcare on weekdays and weekends, and even comes at night if needed. She was a tremendous support during the most challenging time. One day, while spending the entire day together, I asked her why she worked so diligently. Her answer was quite shocking. She told me that she used to be a stay-at-home mom until she fell victim to a voice phishing scam. She lost a significant amount of money and even suffered from panic disorder due to the trauma. I felt a pang of guilt for prying into her past, but hearing about the pain she endured made me realize that voice phishing scams can happen to anyone. It was a reminder that it's not just something that happens to others.
In 2023, voice phishing scams in South Korea resulted in losses exceeding 196.5 billion won. Recognizing that this issue could no longer be ignored, the banking sector introduced a financial fraud victim support program in 2024. This ""Voluntary Compensation System"" allows banks to share some of the burden of financial fraud losses. Any victim of financial fraud since January 1, 2024, can apply for compensation. The final amount awarded is determined by a comprehensive assessment of the bank's fraud prevention efforts. The amount of compensation also varies depending on the victim's level of negligence. For example, if a victim shared their personal identification number or bank account details with others, the amount they can receive may be reduced. Six months after the system's implementation, the first case of compensation occurred. KOOKMIN BANK paid 1.275 million won to a victim who lost 8.5 million won after clicking a link in a funeral notice. This marks the first instance of a bank taking responsibility and compensating a victim under this new system.
Although the number of applicants is still low compared to the total amount of losses, as the system hasn't been in place for a year yet, it's expected that more people will apply for compensation as the system becomes more established. With this system in place, banks are required to prove their fraud prevention efforts, forcing them to focus more on security measures. Recently, banks have been actively utilizing AI technology to detect and prevent financial fraud in real time.
In particular, banks are leveraging ChatGPT to analyze vast amounts of text-based data to prevent financial fraud. If text such as fake invoices, false financial statements, or counterfeit transaction records appears suspicious, additional security measures can be implemented. According to Forbes in 2022, 2,750 companies in the United States suffered losses of $280,000 due to invoice fraud. In Texas, an accounting employee named Jennifer LaBarge issued fraudulent invoices and acquired over $800,000. She used this money to pay off her car loan and personal bills through data manipulation. In such cases, AI like ChatGPT can not only provide real-time expert monitoring but also instantly verify compliance with regulations. Additionally, AI can quickly identify suspicious emails, spelling errors, etc., to detect and take action against fake or AI-generated invoices. It can also be applied to analyze past transaction data to identify unusual patterns in financial fraud. For instance, if a customer suddenly withdraws or spends a large amount of money abroad, additional security measures can be taken.
In addition, physical authentication can also be used to prevent financial fraud. For example, technologies like SSenStone's TAP OTAC utilize strong authentication to safeguard against such crimes. As authentication codes are newly generated each time, financial fraud can be prevented in advance. When a user tags their mobile device, authentication occurs, making it impossible for hackers to attempt high-value transfers or access financial services. This is because authentication requires tagging the mobile device. In this way, physical solutions can also be employed to prevent financial fraud proactively.
With the increasing frequency and sophistication of financial fraud, a variety of AI-powered fraud prevention and management solutions, as well as physical authentication technologies, are emerging to combat these threats. This highlights the growing prevalence of financial fraud and the development of diverse scam tactics in today's world. In this reality, where we are inevitably exposed to the risk of financial fraud, our responsibility lies in adapting to the risks, maintaining vigilance, and proactively addressing the issue through prevention. The first step is to follow the example of SSenStone's dynamic authentication and pay close attention to critical matters like personal finance, security, and accidents. We should actively seek out and adopt technologies that can be applied to our own lives.
