Teh Rise of AI-Fueled Refund Fraud: A Growing Threat to Indian Businesses
A concerning new trend is emerging in India: the use of artificial intelligence to fraudulently claim refunds from restaurants and rapid commerce (q-commerce) companies. While still nascent,this practice has seen a dramatic increase in recent weeks,with at least four documented cases in the last 20 days.This isn’t just a minor annoyance; it represents a notable threat to the trust-based ecosystem that underpins the hospitality and delivery industries.
Recent reports detail instances of customers submitting AI-generated images depicting issues like dead flies in food or cracked eggs, leading to unwarranted refunds. An Indore restaurant, for example, discovered that images submitted as proof of contamination were 99% likely to be AI-generated. Similarly, a Swiggy Instamart user successfully claimed a refund for damaged eggs using an AI app to exaggerate the extent of the cracking.
This ease of manipulation is alarming.As Kushal Soni, founder of AI photo application Pixelera.ai, points out, creating a deceptive image now requires ”one command and one click.” The accessibility of these tools means anyone can potentially fabricate evidence to exploit refund policies.
However, the battle isn’t lost. The solution, ironically, also lies in AI. Numerous tools are being developed to detect these fabricated images, and the race is on to deploy them effectively.While some attempt to add AI watermarks to images,these are easily removed using the same AI technology.
Companies like Zepto are proactively addressing the issue. they are exploring and integrating open-source detection tools, supplementing automated systems with human review. Karthic Somalinga, VP of Engineering at Zepto, emphasizes their commitment to protecting genuine customers through AI and machine learning models that analyze behavior and flag suspicious activity. They’ve strengthened fraud detection systems over the past year, focusing on real-time analysis and manual validation.
This isn’t a problem confined to India. A recent survey by Forter, a US-based fraud prevention company, revealed that 45% of US and 52% of UK customers admit to misusing retail policies with the help of AI. Common tactics include altering images to depict food as undercooked or damaged. China has also experienced a surge in these scams, particularly during its major shopping festivals, leading sellers to implement credit scoring systems and limit refund options.
So, what can businesses do? Beyond deploying AI detection tools and increasing human oversight, experts suggest a shift in approach. Requiring video proof in certain cases can be highly effective. AI currently struggles to generate convincing, consistent videos, adding a significant hurdle for fraudulent claims, as noted by AI ethicist Sundar N.
Offering replacements instead of instant refunds in some situations can also mitigate risk. This allows businesses to investigate claims thoroughly while still providing customer service.
Ultimately, combating AI-fueled refund fraud requires a multi-faceted approach. It demands continuous innovation in detection technology, a commitment to robust verification processes, and a willingness to adapt policies to stay ahead of evolving tactics.Protecting the integrity of the online marketplace is crucial for maintaining consumer trust and ensuring the long-term health of the Indian hospitality and q-commerce sectors.
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