Growth Of ‘AI’ In Financial Frauds: Analysing Customers, Banks And Platforms’ Liability & Effectiveness Of Current Legislations

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Khushi, BA.LL.B. (Hons.), Quantum University, Roorkee

ABSTRACT

Artificial Intelligence (AI) has triggered a paradigm shift in the digital financial ecosystem, revolutionizing financial services while simultaneously creating unprecedented opportunities for fraud. This paper looks at the development of AI-driven financial fraud, from traditional cyber-enabled scams to more advanced tactics like deepfake impersonation, voice cloning, intelligent phishing, and synthetic identity fraud. It examines how AI has increased the scale, credibility, and complexity of fraudulent activities, creating significant challenges for financial security and consumer protection.

A key focus of this study is the changing responsibility among customers, banks, and digital platforms. It evaluates bank responsibility for unauthorized transactions, the rising expectation for customer vigilance, and the new roles of intermediaries that manage digital payments. The paper highlights the legal ambiguities surrounding liability distribution and their effects on consumer rights and dispute resolution.

Further, the research assesses the adequacy of existing legal and regulatory frameworks in addressing AI-enabled financial frauds. It highlights important gaps in laws meant for traditional misconduct. The paper calls for a new liability framework and specific legal changes to tackle the unique challenges posed by autonomous and AI-assisted fraud, ensuring accountability, financial strength, and better consumer protection in the digital era.

Keywords: Artificial Intelligence, Financial Frauds, Liability, Cybersecurity, Deepfakes.

49. GROWTH OF ‘AI’ IN FINANCIAL FRAUDS- ANALYSING CUSTOMERS, BANKS AND PLATFORMS’ LIABILIT

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