Notaries are more important than ever amid the rise of Artificial Intelligence.

This is the first in a series of articles focused on Notaries and how they can navigate through the age of Artificial Intelligence.

AI Powered ‘Synthetic Identity Fraud’ Is Expected To Cause Billions in Losses by 2030

Earlier this year, it was reported that a finance worker at a multinational corporation in Hong Kong was scammed into sending a $25 million wire transfer to criminals. How did it happen? The worker was directed to make the transfer during a videoconference with the company’s Chief Financial Officer and several other members of the staff.

The problem was that the CFO and employees were not real, but digital imposters created by the criminals using “Deepfake AI” technology. The worker saw their faces, heard their voices, and watched them move and interact with their environments and each other.

These elaborate fraud and financial scams are becoming more common with Artificial Intelligence (AI) technology, setting off alarm bells for consumers, business owners, and risk managers, among many others. While the mass use of AI is relatively new for everyday users, the technology has advanced so rapidly that criminals have developed a significant edge because the technologies to detect AI fraud are still emerging.

In August of 2023, leading credit bureau TransUnion reported that U.S. lenders had already experienced $2.9 billion in losses due to AI-assisted fraud. The numbers continue to rise.

AI is being leveraged to impersonate individuals by using sophisticated voice and visual manipulation to create near-perfect fake IDs and other identification documents, to create realistic-looking phishing emails, to fuel cyberattacks, and to easily avoid fraud detection methods, among many other nefarious uses.

Amid the skyrocketing concerns to combat these crimes, one reality continues to rise to the surface: Notaries are more important than they have ever been in modern history.

That’s because the level of fraud these criminal actors are promulgating is occurring on a massive scale. In March, ATT reported that hackers stole the data of 73 million people, most of whom were former customers. The data included the victim's first and last name, date of birth, and social security number.

“That is all you need to establish a fake ‘synthetic’ identity based on real data,” said Andy Sheldon, VP of Marketing for Deduce, an AI security firm. “These (criminals) aren’t hoodie- wearing, Pop-Tart eating hackers living in their mom’s basement. These are highly sophisticated, well-funded state actors or corporations who are deliberately trying to undermine every aspect of the U.S. population, from banking fraud to election fraud and everywhere in between.

“The only surefire way to determine if someone is an actual real person is to meet them face- to-face ... and the absolute best way to accomplish that simply and seamlessly is with a Notary Public.”

The rising threat of AI-generated identity fraud

A recent survey of 500 fraud and risk professionals revealed there is significant and growing concern in the financial services industry that the instances of “fake and fraudulent” customers are surging at a rapid pace, and that their security and identity detection technologies might not be able to keep up.

The survey, commissioned by Deduce and conducted by Wakefield Research, further revealed that financial institutions that service loans, issue credit cards, and run credit checks are having a tough time contending with "Synthetic Identity Fraud" in which criminals use “generative AI” technology to steal people’s legitimate personal information, data, voices, and photos to impersonate them and commit fraud.

Criminals also use AI to handle nefarious automated tasks to scrape the Internet and other data sources at lightning speed, stealing personal data and generating fake corresponding data, empowering them to better masquerade as their victims.

The threat is so significant that the U.S. Department of Justice recently announced it is beefing up its enforcement efforts on criminals using AI and could enhance sentences for those convicted.

“AI is a great peril when criminals use it to supercharge their illegal activities, including corporate crime ... our prosecutors will be seeking stiffer sentences — for individuals and corporate defendants alike,” said U.S. Deputy Attorney General Lisa Monaco at an American Bar Association conference in March. “Compliance officers should take note. When our prosecutors assess a company’s compliance program, they consider how well the program mitigates the company’s most significant risks. And for a growing number of businesses, that now includes the risk of misusing AI.”

Last July, the Deloitte Center for Financial Services estimated that synthetic identity fraud could cause at least $23 billion in losses for financial services firms by 2030. During that time, these crimes are expected to become more frequent while industries struggle to catch up with methods to detect them.

That’s where Notaries come in.

How Notaries can stop AI identity fraud

From the idea of telephone-based notarizations in the 1970s, to the rise of computers, the Internet, biometrics, and blockchain technologies, “experts” are again predicting the imminent demise of Notaries. They contend that technology could easily and more accurately perform the identity verification function that Notaries provide; however, technologies have created new risks for fraud, making Notaries even more essential.

Life-changing transactions like mortgages, estate plans, powers of attorney, adoptions, I-9 verification forms, and medical directives, among many others, require professional standards of care that only Notaries can provide — trust, discernment, and human judgment – none of which AI can possess.

There is no better example of how important those principles are to our economy and our nation than the government’s response to notarizations during the COVID-19 pandemic.

In a recent keynote at the Maryland Notary Public Day Conference, NNA Vice President of Government Affairs Bill Anderson recounted that in March 2020, U.S. Treasury Secretary Steve Mnuchin declared that Notaries Public are essential to the work of our nation. During the COVID-19 lockdowns, states could have issued temporary suspension of all laws requiring documents to be notarized. They did not.

“What would have happened? There would have been more forgeries. In the case of trust documents or powers of attorney ... there would have been more will contests between heirs and beneficiaries,” Anderson said. “They did not suspend these laws because they realized the gain wasn’t worth the pain. And we learned that Notaries are essential. Your jobs are so important that you must keep working for the good of all of us and our country.”

Need more proof of why Notaries are more important than ever? Even AI platforms like ChatGPT, Google’s Gemini, and Microsoft’s Copilot say they are. In recent queries on all three platforms about the importance of Notaries, they all gave similar responses that revolved around the following principles:

“Notaries Public perform a variety of duties beyond document authentication, including witnessing signatures, administering oaths, and certifying copies of documents. These tasks often require human judgment, discretion, and interpersonal skills, which may not be easily replicated by AI.”

Notaries also meet face-to-face with document signers, whether in person or via remote online notarization; they are specially trained and supported to handle their duties; they are aware of complex and sometimes regional legal requirements to perform notarizations; they know how to handle complex transactions that require a human to navigate properly; and they have a legacy of trust and confidence amid their regulatory oversight to provide their service.

So, as we embark on this new era of synthetic identity fraud and massive risks to our transactions and the economy, a Notary’s human element of judgment, trust, and legal remains indispensable, ensuring the integrity and validity of transactions in a complex and evolving landscape of risk.

That will not change anytime soon.

Phillip Browne is the Vice President of Communications at the National Notary Association