Japan to Utilise AI for Early Fraud Detection

Tokyo (ANTARA) - Japan’s Consumer Affairs Agency announced on Tuesday that it will utilise artificial intelligence (AI) technology to analyse complaints received by consumer service centres across the country, in order to detect sales fraud schemes earlier and minimise public losses.

The agency aims to identify deceptive tactics, such as Ponzi schemes, where perpetrators divert funds from new investors to pay existing ones without actually investing the money.

Furthermore, the agency will share information with the police and financial institutions.

The agency will also utilise GenAI, an AI platform developed by the Japanese Government, by inputting persuasive phrases used in various large-scale investment fraud cases in the past.

Until now, the agency has only investigated companies after the number of complaints reached a certain threshold, subsequently considering warnings or sanctions based on the Consumer Safety Act.

Ponzi schemes often evade early detection because, initially, organisers pay out returns and tend to agree to cancellations or refunds as soon as complaints arise.

As a result, by the time a sufficient number of complaints have been collected, total losses have often increased drastically.

The types of products used in investment fraud are also becoming increasingly diverse and complex, encompassing financial instruments, real estate investments, and electronic device escrow services.

Amidst this trend, the agency will change its approach by immediately publishing characteristic methods of persuasion and sharing information with relevant authorities, including the police, even when the names of the businesses involved cannot yet be disclosed to the public.

Even after such information has been published, the agency stated it will continue to consider issuing warnings that name specific businesses and taking administrative action.