FRAUDFORWARD
Advanced Fraud Solutions Leadership Part 2: AI Automation, and What’s Coming
48 min
What is up fraud fighters, and welcome to Fraud Forward!
AI is accelerating fraud, 100 percent. But the bigger risk, the thing that should keep every fraud leader up at night, is what happens when fraud teams stop thinking strategically because the queue never ends.
In Part 2 of Fraud Forward, I’m back with Ted Josephson, VP of Bank Fraud & Credit Strategy at Synchrony Financial, and we are getting into fraud leadership at the enterprise level, where strategy, AI, automation, and culture collide.
Because let me just assure you, fraud prevention at scale requires more than tools. It requires fraud leadership strategies, fraud team leadership that protects time for long-term planning, and strategic fraud solutions that can separate normal fraud noise from the signals of a true fraud shift.
Then we get direct about AI. Where it’s delivering real value today, where the industry is still overhyping “AI” that is not actually learning, and why certain decisions, especially first-party fraud, should never be fully automated without human accountability and empathy.
And fraud fighters, we close with what Ted thinks is being underestimated right now, and it’s big. Agentic commerce creating a new accountability and disputes nightmare, plus the rise of casual “friendly fraud” as a cultural norm. Because fraud prevention evolution is not just a technology program, it is bank fraud leadership and credit risk leadership in action. This is fraud prevention innovation, and it demands strategic fraud decisions.
What you’ll hear in this episode:
- How enterprise fraud teams protect time for long-term strategy when fraud never stops
- Why planning cannot be an extra, it has to be scheduled like any other critical operating function
- How to tell the difference between normal fraud noise and the signals of a systemic weakness
- What separates a short-term spike from a true fraud shift
- Where AI is delivering real value today, including consistent case narratives and operational efficiency
- Where the industry is still overhyping “AI” that is not actually learning
- Why certain decisions, especially first-party fraud, should never be fully automated without human accountability and empathy
- Why agentic commerce could create a new accountability and disputes nightmare
- How casual “friendly fraud” is becoming normalized, and why that cultural shift matters
- How banking fraud strategy and credit strategy leadership collide in enterprise fraud teams
You should listen to this episode if you:
- Lead fraud solutions leadership efforts and you feel like the urgent is crowding out the important
- Run fraud prevention at scale and need a better framework to separate noise from true fraud shifts
- Are building fraud leadership development for your team and want practical, real-world strategy
- Manage enterprise fraud teams and need strategic fraud insights you can apply immediately
- Own bank fraud leadership responsibilities and want to pressure test your strategic fraud solutions
- Are navigating credit risk leadership decisions alongside fraud risk and disputes
- Are worried about agentic commerce, dispute accountability, and what comes next
- Are watching “friendly fraud” become a cultural norm and need fraud leadership strategies to respond
If you liked this episode, be sure to subscribe and review the podcast on iTunes, Spotify, YouTube, or wherever you listen to podcasts. It really helps with getting the word out.
Episode notes & key takeaways
Before we double click on the notes, I just want to say that my marketing team told me I need to structure these notes a certain way in order for people to find my podcast.
Protecting Strategic Time When Fraud Never Sleeps
Let’s reset the room for a moment.
Fraud is relentless. The alerts do not care about your planning calendar, your quarterly priorities, or your leadership offsite.
So if planning is treated like optional work, it gets eaten alive by the queue.
Here’s what Ted lays out that fraud leaders can do to protect strategic thinking:
- Schedule planning like a core operating function, not a side project
- Create protected blocks for long-term risk assessment and scenario planning
- Build a cadence that forces reflection even when operational pressure is high
- Align leadership expectations so strategy time is defended, not negotiated away
This is advanced fraud prevention and fraud leadership in practice.
It is fraud leadership strategies that keep enterprise fraud solutions from becoming reactive forever.
Fraud Noise vs Systemic Signals
I want to double click on that difference between noise and signal.
Because if you cannot tell the difference, you either:
- Overreact and thrash your teams
- Or underreact and let a systemic weakness grow roots
Ted breaks down a practical way to spot the difference:
- Noise looks like short-term spikes tied to seasonality, campaigns, or one-off vectors
- Signals show up as repeatable patterns, cross-channel consistency, and control failures that keep resurfacing
What separates a short-term spike from a true fraud shift:
- Persistence over time, not just volume
- Movement across products, channels, or customer segments
- Evidence of adaptation by criminal networks
- Clear strain on existing controls, including manual review and dispute handling
Let me just assure you, fraud fighters, the shift is not always loud.
Sometimes the signal is that your enterprise fraud teams are spending twice the time to reach the same outcome.
AI in Fraud: Real Value vs Overhype
Now let’s get into it.
AI is everywhere in fraud marketing right now, and not all of it is real.
Where Ted sees real value today:
- Consistent case narratives that reduce variability and improve operational quality
- Operational efficiency that gives teams time back without lowering standards
- Support for decisioning workflows when used as augmentation, not a replacement for judgment
Where the industry is overhyping “AI”:
- Calling something “AI” when it is not actually learning
- Treating automation like intelligence
- Overselling outcomes without showing accountability for false positives, disputes, or downstream harm
And here is the no-nonsense fraud leadership point:
Certain decisions should not be fully automated.
Especially first-party fraud, where intent, context, and customer impact require human accountability and empathy.
That is fraud team leadership.
That is strategic fraud decisions.
That is bank fraud leadership that owns the table.
Underestimated Risks: Agentic Commerce and Friendly Fraud Normalization
This part matters.
Ted calls out two risks he believes are being underestimated right now, and this is where fraud prevention innovation and fraud prevention evolution need leadership, not hype.
Agentic commerce and the disputes nightmare
Agentic commerce changes the accountability question.
Who is responsible when:
- An agent initiates a transaction
- A consumer claims they did not authorize it
- The merchant or institution cannot clearly prove intent or confirmation
- The disputes workflow is flooded with gray-area claims
This is a strategic fraud solutions problem and a banking fraud strategy problem at the same time.
It is enterprise fraud solutions meeting reality.
Friendly fraud as a cultural norm
The rise of casual “friendly fraud” is not just a fraud trend.
It is a culture trend.
When chargebacks and “I did not authorize” claims become normalized behavior, you end up with:
- Higher dispute volumes
- More strained customer service and fraud operations
- Harder differentiation between true victimization and intentional misuse
- Increased risk of overcorrecting in ways that punish real victims
And fraud fighters, this is why the episode lands where it lands.
Fraud prevention is not just a technology program.
It is a leadership discipline.
It is fraud leadership development over a fraud industry journey.
It is fraud fighter career growth that turns into fraud solutions leadership, and it is credit strategy leadership partnering with fraud, not operating around it.
Stay vigilant, stay informed, and keep moving fraud forward.
Episode transcript
Ted Josephson45:20
Have the best time. This is great.
Hailey Windham45:23
Technically, technically you didn't leave, but we're splitting this up into two parts. So we're just we're just giving them more than they asked for[a].
Ted Josephson45:31
I'm happy and anytime you get a fraud person, you get a chance to talk about your things with other people who enjoy fraud. It's a great day.
Hailey Windham45:39
Right, because then you don't have to like explain the nitty gritty because they're like, what do you mean by implement a rule? And you're like, I just want to talk to somebody that knows what I mean. Okay, so we're moving on to talking about strategy versus firefighting. We talked a lot about, you know, crisis, things happen. You know, there are those times where it's fraud never sleeps. Right. And strategy requires oxygen. So how do you protect for long-term thinking.
Ted Josephson46:11
we plan it out. Cause it's the nature of the corporate world, especially the larger your organization, the more overhead you kind of get in your lives. and all, and all, all good, you know, I don't want to disparage those who create overhead in our lives, but a fraud fighters role in your heart is you want to fight fraud. And so if I'm filling out another complaint for, for this or another toll gate for that or another, those do not bring joy. They bring, they bring controls, which is nice. So that being said, if you don't build the time in for your team and for yourself that's blocked out just like a meeting is, or just like a series of meetings are, to do that planning, you will always be fighting the fire. I just had my team in last week, a good chunk of my team, and I had the pleasure of having them all together. And we spent the time and we... generally turned off our phones and you know, there was some fraud fighting going on in the background, but in general, our focus was on what's our next steps related to this over this time frames and how are we building in these new tools and how do we incorporate new data points and things like behavioral monitoring into our existing strategy and how do you plan for that as opposed to, I have it. And I get a lot it. I'll live it all of its alerting do it and I don't know what it's doing But I hope it works what so yeah, it's it's about time and you know, that's what they pay us for it said But it's very easy to just become reaction all day long and look good because you're stopping fraud So you're able to report and do cool stuff but at some point that's gonna bite you because you're gonna take a massive fraud loss because you haven't been planning ahead and There's gonna be something you you didn't have ready and you couldn't fix in two days with something on the fly.
Hailey Windham48:06
That resonates so much. can truly remember sitting there fighting fraud day in and day out going, okay, I'm stopping this one. I'm stopping that one. But then thinking, you know, a news article came out and it was like, Hey, we told you that this change was going to happen or this, you know, is the new mandatory requirement. I'm like, I'm not prepared because I wasn't expecting this or here's this new fraud trend that's coming out. That's attacking our, you know, online account takeovers. And I'm like, what is happening? Okay. Let me just. pivot, but then everything I was fighting before is going to get left to the side and we weren't prepared for anything new. I truly mean so much hearing that, but it resonates because I have been that fraud fighter that has had to be reactionary because I was in the weeds too much fighting the fraud and not being able to dedicate that time to prioritize different strategy.
Ted Josephson48:57
And you have to make it so that your team knows it's a priority for each one of them. And if you are not assigning them tasks that help them to set aside time to grow, you know, I've seen some leaders who are so in the weeds and so wicked good at it that they won't let anybody else get good at it. There's other good people on their team, so they could step off and maybe do a little bit more of the other, but they're right in because they love it. It's their happy place. So it's hard. Remember I said it was hard to step away from the weeds.
Hailey Windham49:14
Mm.
Ted Josephson49:27
But do your team a favor, let them grow too and have that joy. I've done less fun things because I wanted my team to have the opportunity.
Hailey Windham49:37
That's hard. It's hard.
Ted Josephson49:39
It really, I will tell you, it really sucks sometimes. That's the only way to describe it. But because you love your team and you want what's best for them, it's like being a dad is hard. There's sometimes you do bad stuff that it's, you do it because you love your kids. I do it because I love my team and I love my company. I want it to do well and having it all about Ted, that's not the best of any.
Hailey Windham49:51
Right.
Hailey Windham50:03
No, no. But we do like having Ted on the podcast. So we are getting the best of Ted right now. But I will say, I think probably one of my absolute favorite moments in my career was when I had a frontline team member. She got it like it clicked and she called me so excited. I mean, she was jovial, you know, and she was like, Haley, I stopped a member from sending out $60,000 in a wire fraud. And I was like, what? Tell me all about it. And so I literally spent 30 minutes with her telling me the whole story. I wrote up a memo for the executive team to say what she did. And then like that got her additional like, you know, points or whatever they called because, you know, it was like they get credits for all the things that they sell to what we were talking about with like account points, but being able to prevent fraud too, started being a part of the point system as well because of that particular scenario. So that was just like such a good win. for Frontline and that it was one moment that proved that showing them how to do and teach a man to fish versus giving him a fish, you
Ted Josephson51:11
and you incented that person, you gave them an incentive, they were excited and you doubled down on their incentive. So they will never forget that. You built a fraud fighter that day.
Hailey Windham51:20
Yeah. For sure. For sure. I just got chills. I miss it so much. I miss being in the weeds like that, being able to work with a team and, you know, get my hands dirty in the fraud. But this is also it's rewarding on this side as well, obviously, because I'm talking to people like you, Ted.
Ted Josephson51:26
you
Ted Josephson51:37
Life is a box of chocolates. There's always a bunch of good choices, but you can't eat them all at once. So we make a variety.
Hailey Windham51:43
No. Yeah. Okay. So speaking of variety, how do you prioritize under pressure?
Ted Josephson51:52
Uh, well, if pressure is defined as a fraud event, what's the, what's the biggest risk? What's my biggest dollar amounts? Um, you know, where, where is it most likely to go off the rails? Uh, and then focus on that, you know, generally if, if we're having an event, uh, I try to figure out, we, we, we've got to figure out where it's coming from. You know, that's for sometimes you don't know what is going on. don't even know how this is happening. Uh, and so focus on what's the point of origin.
Hailey Windham51:56
Yeah.
Ted Josephson52:22
of what's going on. Okay, from there I can start to focus in my forensics on trying to stop it. But if I don't even know where it's coming from across my branch network or get my native app or my digital channel or the call center or mail, those are also sneak up on you, you can't control it as well. So at least you can put a bandaid on it and then move.
Hailey Windham52:44
Yep, can definitely appreciate that. And then it leads me also to ask, how do know when rising fraud losses signal a systemic weakness versus just noise?
Ted Josephson52:57
you know, we do forensics, know, we do post mortems and we try to look for commonalities in every fraud event that we have. And so we, and we track a lot of you know, we're tracking our alerts, we're tracking our loss avoidance. So we're tracking approval rates and decline rates and things go into manual review. When you start to notice an aberration, in one at the same time you're starting to get some noise or some interesting fraud losses here. We try to pull together to see is there something going on. But you got to stay on top of it. If you're not recording and tracking, if it's only just about losses, you'll wait until you're bleeding out the ice. If every time you're having a loss or at least a decent size loss, you try to get a good feeling for why did that happen? And if you start to hear that two or three or 10 times, you okay, now we got a problem. But it means having people who's willing to be in the weeds, good partnership with your operations teams because sometimes they're going to be seeing some of it and you won't. So, you know, our extended, you know, I have my fraud strategy teams and our analytics team and, we're deep dive on that, but we work seamlessly with our fraud operations team, which is the frontline guys working the alerts, you know, doing the individual, you know, analysis and things using all the other tools we've given them and we provide support. But we are, might as well be on our team. I just don't pay their payroll which is you know cheaper for me but you know somebody they get they're happy but yeah we treat them like they're our team so that they know they're loved and when they people are appreciated they they they give their best.
Hailey Windham54:31
Right, right,
Hailey Windham54:42
And I've noticed that they often collaborate more as well and more willingly. know, it's like, Hey, we, see something that's kind of odd. Whereas before they might feel closed off to just keep it siloed in their own group. But whenever you have that openness or that oneness of true, true team spirit, I don't know. I want to call us like all cheerleaders, all the, you know, I feel like that's kind of what we are as broad fighters, at least internally. But once, you know, once you remove that silo from your operations or you're from your front lines.
Ted Josephson54:43
No, I'm not eating. Yeah.
Hailey Windham55:11
It really does become this collaborative group effort of fighting fraud.
Ted Josephson55:15
There's nothing more fun. you know, not every culture, you know, in terms of corporate culture encourages somebody from the frontline to ping me. I'm like, you know, I always would, we would do the like group town halls or different things like this. If I had a chance, I'd say, guys, my team's box is never full. You are welcome to ping me at any point. If I don't answer it's not because I don't love you or maybe because I'm on a call, but I will answer. I would love to hear from you. And if I can't help, I'll get somebody else to. And so a good day for me was when I had somebody I've never heard of before reach out to me and say, Hey, I heard you'd be helpful. And I try to help them on it. And that's, that was our teams. You know, so it was working with fraud teams, working with call center teams, wherever it might be. We wanted to be the accessible, helpful people. And I think we've achieved a pretty good balance on that.
Hailey Windham56:04
That's our new slogan, Fraud Fighters, the accessible, helpful people.
Ted Josephson56:06
That's We won't yell at you for calling.
Hailey Windham56:12
Yeah, I love that so much. I'm probably going to make a sticker. We're put this on our laptops, on our cups everywhere. So anyways, that resonates. It really does. I feel like that's where most fraud teams probably miss the boat is not being accessible, not being reachable where it's like, put it in the queue and we'll get to it when we get to it. I know that at scale it's hard.
Ted Josephson56:19
you
Hailey Windham56:41
But at the same time, they've got to be able to reach someone when there is a five alarm fire in their minds. They need to at least to be able to have someone they can call.
Ted Josephson56:52
Yeah, I mean, I just, I think just very recently, you know, I got a pass forward on one of those and I reached out to one of our senior VPs in another group for outside of fraud, or it was a fraud person, but working with our credit platforms and they could have easily just brushed me off. Let me send you to Susie Q customer service that, you know, was it going to do anything? No, no, no. They sent me to the senior person over here who did that nail thing. And we, we had it resolved in like 20 minutes. Because, again, fraud fighters care. So it's nice. I don't want to brag about this, but I think it's a great culture, the fraud teams.
Hailey Windham57:29
When you have the mic, Ted, use it. mean...
Ted Josephson57:32
Well, mean, okay, Grady is a great place. I think part of my favorite.
Hailey Windham57:37
Yeah, yeah. Okay, so let's transition and talk about AI automation and the human edge, right? Where do you think has AI delivered real value?
Ted Josephson57:50
to the fraudsters.
Hailey Windham57:53
Yeah, right.
Ted Josephson57:55
Sadly, think, boy, it's really made their lives a lot better. My text that I get soliciting me for stuff is much better and has deeper, richer data in it, much more targeted. So sadly, I think the processors are really benefiting from it. From what I have seen, I've seen some very interesting, I would still say it's still early because there's concerns about using PII within AI engines and appropriate. Concern for that you need to have that well done and you need to have a I think a relatively it's probably hard to say mature AI Infrastructure and governance to make sure that you do that. Well, and you're not accidentally going rogue on it that being said I've seen some really interesting things especially about rule strategy or model tuning where it's looking at the performance looking at all the data that's available looking making automated recommendations on how to make it better as opposed to Let me turn my analyst run 15 iterations of your best guess on what other things, features we can might add to this to make things better. So I've seen that. I think the, I'm very excited for what I'm seeing. There's solutions in market and some are still a bit nascent, but it's pretty, for writing up case histories. I mean, we all know that most case write-ups are colorful, you know, and usually on informative and SAR narratives. know, SAR narratives, you read one and it's got three lines in it, one that's got 50, and know, by two different people because everybody does their thing. So consistency of write-ups, inclusion of data, AI is perfect for that. Again, it's large language model. So I'm taking a bunch of data, turning it into a narrative that makes sense, it's consistently applied. I think that is transformative, super operational efficiency. oriented and you have a real person sign off on each one when it's done. But that's grunt work. Writing up a narrative is nobody's best and brightest day. And that is perfect AI process. I do think you will see more and better application of analysis for frontline people. This makes me a little nervous for frontline people. Because when you...
Ted Josephson60:17
A lot of what they do is they look at disparate systems that aren't tied together well and they do ancillary things to make a best guess at fraud. Now we already know that there are solutions in process that will put an AI overlay on that, looking at all the data and providing a summary of it and maybe a best guess at fraud typology, if it is. It doesn't take a lot to extrapolate that into the future and say that that could have a material impact on it or it will require upscaling of the skills for the people who are currently doing that so that they can provide more value than just collating the data and making a best guess. They will have to provide a more expert level and it will require more of an expert level of skill for it. So. I'm trying to be careful on that one, but I think that's the reality. If my son or daughter was in that space, I'd be saying, you guys, you need to keep raising the bar. And it's not getting your certified fraud examiner title, it's not gonna help you in that. You need to jump a little harder.
Hailey Windham61:28
Yeah, I've said this before, the only thing that scares me in the sense of AI coming on to the process for fighting fraud is that I fear for what it will do for the new people coming on. Like we do have some really good insights. An example, real world example that I'm trying to... to say here is speak in the words of fraud people, right? Or whatever. But if we think about the cash registers, back in the day, you would say the amount and they'd say $20.22 is your total or $19.22. They'd give a $20 bill, you'd hit $20 now and it tells you 78 cent, but then they go, wait, I've got 22 cent here or I've got two cent, I don't want the pennies. And they go, what? And it's like mind explode. Whereas back in the day, they would not even use the cash register at all and they'd calculate it all up in their head and then, you know, give you the correct change, you know, whatever. You could even add a Coke at the end and they'd know exactly what to do. And so I think the same thing. I'm fearful that we may be too dependent on those alerts that we would get on the frontline versus really empowering them as a fraud fighter to trust their instincts and to trust their gut. AI will never have a gut.
Ted Josephson62:49
No, no, it won't. And we just, we just had that discussion because we were talking about applications of AI. This was with the team last week. And, uh, that's the downside is that you, you, you will potentially incent people to stop thinking the machine set. is it. Then this must be yet as opposed to no, no, no, you need to check to make sure the machine machine is right. And that's why I'm saying you need that upskilling and you got to pay more for that generally in the market. You know, expertise you need to pour into it.
Hailey Windham63:03
Yeah.
Ted Josephson63:19
So, yeah, I think you're spot on that most likely the simplest thing will be, and that may be what some companies want. You know, they just do what the machine tells them to do because I'm going to be consistent process, I'm going to compliant, I'm going to be able go to a regulator and show that there's no bias in anything I'm doing, it's just following this. So that may be actually a business goal. for some companies. And I'm not saying it's an irrational one. It's just not maybe where I'd go, but it's certainly not irrational.
Hailey Windham63:59
Yeah, yeah. So again, we're talking about AI and automation. What decisions should never be fully automated?
Ted Josephson64:01
you
Ted Josephson64:14
Wow. Never. I'm inclined to say first party fraud. think you'll, until AI is a lot better than what I think, there is a certain amount of nuance and heavy moral responsibility when you tag someone as a fraudster, as opposed to identity theft. That if you're gonna do that, you should probably make sure that somebody's really looked at it and thought of the human aspect of it, did it meet this calculation? And that's ultimately what AI is gonna be doing. It's gonna heuristically check that this seems statistically likely that this is first run. Now, maybe super obvious, but I'd rather have a person double check that.
Hailey Windham65:05
Yeah. Yeah. 100%. I know that I knew it was going to be a tough question by putting the word never in there, but definitely just wanted to kind of gauge your response there. So definitely appreciate that and agree. I think that there are so many wonderful things that the human aspect of fraud fighting really does. It brings to light the, obviously the empathy that we can have for a victim, the what happens afterwards.
Ted Josephson65:09
you
Hailey Windham65:34
how we can really work to prevent that from ever happening again versus just say, you're a fraudster, get out of here, you know, whatever. And then they go and they do it again at another FI or then they become an unbankable person. And then what good has that done for them and eventually the economy and, you know, banking as a whole.
Ted Josephson65:58
All the romance scams, these lonely people who have fallen for it, clearly colluded, done really, in many cases, incredibly stupid things, and that they are personally responsible for it. But I don't think they're morally important people. They're sad folks. And I do think you need to have some heart in that, that would, I think, go beyond what AI's capable of.
Hailey Windham66:24
I love that. I have been quoted saying AI doesn't have a gut. I think we're going to quote Ted saying AI doesn't have heart. Okay, if AI disappeared tomorrow, what would break first in fraud operations?
Ted Josephson66:40
Currently, Nothing. Nothing. We, you we, uh, and I would say from what I know, I mean, I'd be interested in your perspective on this from what I know of most, most fraud shops. They don't have AI. They've got, they might have supervised machine learning. They've got, they've got a platform run by so-and-so who says it's AI, but it's not really, it's, it's, you know, it's, it's, it's ML. might be, you know, something like that. Uh, but, yeah, I don't think most shops would shut down. know some cutting edge ones might.
Hailey Windham66:42
Nothing.
Ted Josephson67:11
I know some that are let me see, anybody who's so reliant on AI that it would blow them up, who's so cool. I can't think of anybody who's like, it would really be a problem. I think you'd have some potential, they gotta hire some more people because they've been collating, calling some of the volume out with this, maybe a back office SAR group.
Hailey Windham67:20
Yeah.
Ted Josephson67:39
I think anybody who's probably using, I think Actimized has a star module that does some pretty efficient stuff and may have AI. I think they say it has AI in it. don't, you know, I'm not a definition guy, but if it does, that would probably mean they need more people.
Hailey Windham67:55
Yeah. So my opinion is I feel the same way you do is that there's this misleading mindset in the industry is that we're, we are so AI right now in all of our fraud shops. And really it's like, I know what I see now on this side of things and I'm like, no, you don't have AI and you're not using that. And I can remember just being so frustrated with case management software and going, you said you were machine learning. I have answered the same freaking alert. How many times? And I've told you every time, not fraud, not fraud, not fraud. Why is this still alerting?
Ted Josephson68:45
Nothing is learning. Nothing is learning until an analyst goes in and changes it. And I'm like, that's not learning. That's the model that runs until you fix it.
Hailey Windham68:49
Exactly. Nope.
Hailey Windham68:54
Yeah. So stop with your false advertisement, please. Because you are not AI and you are giving me a headache. Which then also, so I'm going to rephrase how I asked this question. Is today's AI making fraud teams stronger or just busier?
Ted Josephson69:18
Again, because I don't think it's so embedded within most AI shops, I don't think it's having a material difference in most AI shops, or mean, op shops today or fraud shops today, other than possibly where they've applied it for large language models. So if they're doing case write-ups or SARS and things like that, which is the only stuff I've really heard somebody practically do, scraping call notes and doing that, I don't... I don't think there's anything that can have any material impact on them. I talked to Naftali from Sentilink and he was like, everybody's saying, AI is just revolutionizing fraud. goes, no, of stuff is not, especially on acquisition side, because the bad guys are still just taking all the clean data that they've stolen. They're just opening up new accounts and variations on it. And nobody has tools that will stop them from doing it. It's not AI. It's just. Large data analytics applied at scale.
Hailey Windham70:17
Yeah, yeah. what a good conversation. think that I also think that this is one of those I love. I love uncomfortable conversations. I think that that's one thing that is the beauty of this podcast and the step I'm I'm trying to make with it, which is to say we're having these conversations anyways. And it's we need to make sure that the industry understands like don't be. Don't be lied to. Don't accept things at face value. Really, really look into our whole role as fraud fighters is to trust but verify. Why aren't we doing the verify aspect? We're just, we're just trusting a vendor at face value going, yeah, they have this, this and this. Why? Because their white paper said they had it or, did you really see it in action? Did you really, you know, have that?
Ted Josephson71:04
or I was in a crisis and I needed something two weeks. So I'm just gonna slam this in and pray to God that's what it does. Most of the time that doesn't happen. Does it work that way? But it made it better. okay, we're happy for any incremental improvement we can get. And normally most of these things are about MoData. If I got MoData, can do better things. So we'll take what we can get.
Hailey Windham71:07
Yeah.
Hailey Windham71:27
BWAH!
Hailey Windham71:33
that mo data. That's great. I'm literally just gonna go back through this entire transcript and just come up with a bunch of tedisms, okay?
Ted Josephson71:44
I'm going to be colorful. That's my only goal.
Hailey Windham71:47
I love it. love it. Okay. So let's shift and talk about the future of enterprise fraud. What risk is most underestimated right now?
Ted Josephson71:58
and at enterprise level, just for fraud or just to, yeah. I think agentic AI is going to blow up, blow up things. I think there, there, I think there's a rush within the industry in the world. And we go through the hype factor. And if I hear the word agentic AI one more time, you know, this week I'm going to vomit, but, but, geez, you know, it's just, it's insane. But.
Hailey Windham72:20
It's the new buzzword, Ted.
Ted Josephson72:27
People are building it and but officers are using it. People are building it. And I think this turning over of the decision process, the customer turning that over to a machine. And then that's exposed to merchants. So credit, the banks and they're moving money around and doing all this stuff. It hits me as a huge legal nightmare because you you just need one case. After that goes on that says, well, it's an authorized transaction that I told my agentic AI to do. I told, I said, this type of thing I want you to do the first time it does one thing I didn't agree with. Well, that's not what I meant. It's not authorized. You know, and then you have that applied to fraudsters using that just like we do in malicious intent. You know, it's a, it, that to me feels like we could have a a really scale problem because suddenly now I've got, let's say 20 % of the country is using agentic AI to do their stuff. That means 20 % of the country could potentially, unless the laws get really good and very granular, and we're not great at that, suddenly 20 % of the country could say, I didn't mean to do that. I know that money went to Bitcoin. It wasn't me. It may have been me, but now I can dispute it at scale. for what, a month's worth of activity run by my agent at AI? And then I sued the property who sold me the Seneca. So I'm being very snarky here, but to me, it's always about the, I think a lot of the fraud that we have in the country. It's fueled by our laws and our regulations. We've inherently incented people to abuse it. Unfortunately, most people are honest. But the rules allow me to be a real bad guy at scale and nothing's gonna happen to me. In fact, I'll be encouraged. I'll be potentially in front of Congress said, this poor man was taken advantage of by that evil bank. Give him this $250,000 back. Okay. So yeah, I'm pontificating here, but I do think that...
Hailey Windham74:45
Yep.
Ted Josephson74:52
A lot of this could be fixed at a regulatory level. The fact that they let all of the social media solicitation of scams and fraud and won't do a thing. The only person who will get taken down if he complains about it is me. If I could, you know, because I'm harassing this innocent fraud site that's got thousands of members. I'm like, what? There's so much low hanging fruit out there and we're, nobody will do anything about it. And that, that makes me angry. I don't get angry a lot, but I'm like, that, that seems like if I was a politician, boy, talk about a way to really protect people. We'll get them to take down. Don't go after random bits of information. But if it's soliciting fraud and it's pretty obvious and it says, why don't you tell them to take that down?
Hailey Windham75:41
Yeah. Here's your sign. This is fraud. So I have two thoughts after that statement. So one is, Zimar and I just did an episode where we talked about the agentic commerce that is the change that's coming in. That is super scary. And I just wanted to double click it. That's what you're referring to as underestimated. Whereas when I think agentic AI, I'm thinking also like the, where they will have these bots that will do low hanging fruit cases and things like that? Are you talking about both aspects of it or,
Ted Josephson76:16
It's a venture commerce. Certainly, I think that there is tons and tons of opportunities once we can get out of our own model governance ways to revolutionize operations, call centers, the day to day, I need to do this transaction, I'm trying to do this. mean, heaven's best, everybody calls into a call center right now. I want you to do something for me.
Hailey Windham76:18
Got it.
Hailey Windham76:28
Yeah.
Ted Josephson76:44
AI should be able to do that because most of what they do 90 % of the time what they're doing is a replicable thing that needs to follow policies and procedures and cut loose. You know, again, there's there's an automation aspect there that it might impact people. But yeah, I think that's that's going to be really revolutionary to the industry. And I don't know how that's going to play out. Because there's personal sides to it, really, super efficient and over time. Bailey, you think?
Hailey Windham77:16
Yeah. I feel you. My second comment to everything that you said earlier too was, you know, in talking about the regulations and the things that we are governed by, I did a speaking presentation once at a conference and it was on Reg E. And I said, are we protecting consumers or enabling fraudsters? Like, what are we doing with Reg E? Because if I tell you it's fraud, you have to accept that. And then if it comes back as an authorized transaction, no, I'm telling you it's fraud. okay. Well, then I guess it's fraud. Well, here you go. And it's like, no, I proved without a shadow of a doubt, even going on as far as OSINT investigations to pull their Facebook and matching it up with their email address and what's associated in their phone number. And we're pinged and showing you were in fact in Florida for your birthday. And here are the hotel charges. And funny enough, Here's your Facebook photo and the photo that's on the website for this hotel that confirms you were where you said you weren't. What are we talking about? Like, come on.
Ted Josephson78:26
Well, but again, that's what I'm saying. I'm not a big fan of over regulation, but I do think a lot of the regulation does incent behavior that as a society, we shouldn't incent. Should we protect the people who have been taken advantage of? Absolutely. But should there be some additional guardrails in there? know, there's the ability to non-repudiate. I think there's, you I'm not a big fan of national IDs and things like this, but what's our biggest problem in the country from a fraud stamp? I don't know who's on the other end of transaction. So, you know, and here we're having a moral dilemma within the country because we're saying for a, to vote, we want people to have a good ID. Now, whether it's whatever side you're on the aisle for, but again, I can't get on a plane unless I show an ID. And so there's lots of things where we go, yeah, this is cool. to hold a standard for doing banking transactions or financial transactions that there is a reliable form of identification that is unique to you and across the whole country at the very least. It's not like, this is great in Connecticut, but I'm California, nobody knows. You pray to God that it's the right idea. That seems funky for a country as sophisticated as we are. And it would solve a lot of problems if we knew who each other was from a transactional standpoint.
Hailey Windham79:50
Absolutely. So, you know, we talked about the risk that's most underestimated. I'm curious, is that also what keeps you up at night or is that something different?
Ted Josephson80:01
no. you know, again, I'd say that the stuff that keeps me up at night is just the, the casual fraud, the friendly fraud. It's the first, I think it's, it's a statement about us as a country. we're more and more people when I, when I talk to a young person who I like and who makes a casual comment about stealing, like, know, but you know, yeah, I told you, I just told you, you know, the Amazon, didn't get a Walmart. did this. There is it, there is a casualness to low level fraud, that 10 years ago, I didn't hear people talking about it. And I hear over dinner now. You know, like I'm out with people and they say, oh yeah, I did that. just, you know, I'm like, wow. You know, or they didn't charge me for this. So I didn't say anything. You know, it's like a big thing. And you're like, really? Like, seems okay. And they say, yeah, so I got it for free. And I'm like, okay. So there seems to be, and it's probably, you my old guy perspective, you know, like these kids. But it feels like a fundamental change. The difference between like the 80s to the 2000s, you didn't hear me say anything about that. But in the last five, 10 years, it seems like it's okay to screw somebody else, especially if it's a big company. If it's a big company or a bank, they deserve it.
Hailey Windham81:20
Yeah, I've seen that.
Ted Josephson81:22
So that keeps me up and that's why I pray.
Hailey Windham81:25
Yeah, well, for sure. I'll tell you when those conversations happen at my dinner table, you, I get my husband and my 14 year old look at me simultaneously, like, don't say anything. And I'm like, I want to tell him. Now, if it's, if it's other kids, my daughter, she'll hop on them and she goes, you're committing fraud. And I'm like, that's my girl. That's right. You tell them, you tell them.
Ted Josephson81:48
here one more person, it was a hack. I'm like no it's check fraud.
Hailey Windham81:52
Yeah, no, just so you know, that's going to come back and bite you on the butt. You know, they're going to know what the account is tied to you. So great job with that hack, I guess. So that's what keeps you up at night. What excites you about the future?
Ted Josephson82:09
you know, I, I'm, I'm excited about the, the opportunities to get, and again, it probably goes back to the AI side. So much of what we do requires really good smart people to go through reams and reams of data and, and, and reanalyze it constantly and relook at different things to take the grunt work out of that. Like, like to have some, have things running that, make it easier to highlight, abnormalities, you know, I love the idea of some of these unsupervised machine learning models, which I think I'm surprised haven't really taken off or done as well as they should, but I think it's an AI application where I'm looking at all the data that's going on from the bank, your everything like dump everything into this thing. And it should be grouping into these, these are good behaviors, groups of normal behavior. And anytime something kind of whacks out of that, you would say, you know, Ted, you don't understand analytics, but I'm like, no, you know, we should be able to have good sets of normal data and outliers should pop. anytime you and I have both caught fraud or seen fraud caught, it was an outlier. And you go, why didn't somebody notice this? Boy, that seems like a great application. Finally, we'll go for, UMLs didn't do it, but AI sounds like it could.
Hailey Windham83:29
Love that. Love that. Okay. If you could redesign how the industry measures fraud success, what would you change?
Ted Josephson83:31
Thank
Ted Josephson83:37
I would, if we could get better at valuing, I mean, loss avoidance is, is, know, finger in the air stuff, but it's, it's really important. And there's a, there's the valuation of the fraud I didn't let happen and its impact on people or in the fraud I did happen. It's, it's the impact to the, to the, you know, to show you think of the noble. You know all the people that weren't trafficked all the people that upster drugs that weren't done all the only All that horrible stuff that goes on That is enabled by this every dime we removed from them is a huge Moral victory for us in protecting the innocent And I wish there was a less of a just to focus on the dollars and cents as opposed to I saved a million dollars today. my heavens
Hailey Windham84:21
you
Ted Josephson84:33
I helped keep a million dollars out of evil people's hands who were going to do evil things with it. like celebrate not just the money, but the bad that didn't happen.
Hailey Windham84:44
Yes, 1000 % yes. I had a fraud leader the other day call me to say she spent 40 minutes on the phone with a potential victim trying to tell them that, hey, this is following a scam pattern and they just wouldn't believe it, wouldn't believe it and tried to give all the back data or whatever to say how it wasn't fraud. she said, okay, we're just not going to process it today. Let me get back to you in the morning. And the guy was like, okay, well, like, I'm okay if I lose the money, like, it's not going to make her break me. And she said, I appreciate that. But what I'm more concerned of is where the funds would go if it were going to a fraudster. And that mind shift or that mindset shift that happened with that potential victim did so much in that conversation with her. So I completely appreciate that perspective and know that it is definitely something that we need to consider.
Ted Josephson85:38
Well, I'm sure you've had these conversations with executives saying we can take some more losses on this, which we can't. These are business decisions, it's true. But the, we've got plenty of room in the budget. So let's loosen things up so that we can take more losses and achieve this good goal. But nobody talks about the fact, okay, so I'm funding organized crime this much more with my budget here? that, there's. There's a societal impact to that, that it's not just the bottom line. So again, I'm probably a bit of a Pollyanna here, but I have never heard that perspective. Like, you know, I'm morally troubled by allowing more fraud because horrible things will happen with it, but I'm okay with it because I'm making more checking accounts. Okay, well at least say it out loud. I'm getting more at this so that I've never heard that outside of a fraud-fighter's room.
Hailey Windham86:32
for sure. just so you know, Pollyanna is where I got my name from. So her name was Haley Mills, and she was my Nana's favorite actor. That's who I was named after. Just an FYI. Yeah. Okay, last question. know, and it's...
Ted Josephson86:38
really?
Ted Josephson86:45
Wonderful. Okay, here we go.
Hailey Windham86:54
One that's like, what advice would you give fraud professionals who want to reach executive roles or as they are preparing for this next era?
Ted Josephson87:03
you know, the, the, the biggest challenge of a true fraud fighter is we're true speakers and we work within a culture typically that does not value true speaking. It values politically correct speaking. It values nuanced speaking. And so you can speak to truth and love as a fraud fighter and be vilified for it. You you're doing all the right things because they say, this is what we want you to do. So, you know, for any fraud fighter.
Hailey Windham87:20
Thank
Ted Josephson87:32
And I've talked to so many of my peers on this. The biggest challenge is not ticking people off by speaking the truth. And so finding a way to do the right thing, but communicate it in a way that doesn't create an inordinate pushback. You need to show that your intent is so good that the truth that you're speaking, that you're reluctantly speaking this thing, because even though you want this other thing, you need to try to protect. So it's a hard one. I have had success. I have had train wrecks and a lot of it depends on who you're talking to. So you have to constantly adapt. it's really manage your communications well. As fraud fighters, we talk to each other very easily and truthfully and because we get in that habit. It's hard for us when we're suddenly in a meeting with a bunch of people that aren't like that to quickly adjust and remember. So just stay on your game. Remember who you're talking to.
Hailey Windham88:36
Yes, 100%. Ted, thank you again so much for coming on the podcast with me today. It meant more than you could ever know.
Ted Josephson88:39
Thank
Ted Josephson88:45
This is, Hallie, this is a treat. I love and appreciate you. I love what you do. I love this field. I love the people who work in it. And a chance to be a part of that just makes my day. So thank you. This is a wonderful way to end my day.
Hailey Windham89:01
Absolutely. So, fraud fighters, if you listen to both parts of this conversation, you probably felt it. This wasn't just a discussion about fraud losses. It wasn't just about AI. It wasn't even just about enterprise scale. This was about leadership, real leadership, the kind that understands fraud doesn't live in a silo. It intersects with credit, with growth, with customer trust, with culture. And at that level, every decision ripples. Ted, when I think about this conversation, what stands out isn't just the strategy, it's the steadiness, know, the clarity, the willingness to evolve, the intentional promotion of your team. Because at the end of the day, fraud prevention is not a technology program, it's a leadership discipline. And whether you're leading fraud at a national institution like Synchrony or at a, you know, $500 million community bank, the principles are the same. Think long-term, even when the alerts are loud. Protect your people while protecting the portfolio and never forget that fraud prevention is about preserving trust. So to everyone listening, especially those who aspire to lead at that level someday, this is your reminder. The path from analyst to executive isn't about knowing more rules. It's about thinking bigger, collaborating wider and carrying the weight of risk with both discipline and humility. Ted, again, thank you for giving us a transparent look inside Enterprise Fraud Leadership. And to the fraud fighters out there, fraud never sleeps. The threats will keep evolving, the pressure will stay high, but so will we. We lead, we adapt, we think strategically, and we continue to move fraud forward. See you next time.
Ted Josephson90:34
Amen. Take care.
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