68 min
Welcome back to Fraudology.
If you have followed scam trends over the last few years, you know crypto ATMs have been one of those tools criminals loved.
And honestly, it is not hard to see why.
They were fast. They were available. They created distance between the victim and the criminal. And for a long time, they gave scammers a way to turn fear, confusion, and pressure into money that was very hard to recover.
In this episode, I’m joined again by Marc Evans, a veteran Las Vegas detective and the founder of Fraud Hero. Marc brings the kind of front-line perspective that matters here because he is not talking about scams as a theory. He is seeing how these criminal groups operate, how they move money, and how quickly they pivot when one cash-out method starts getting harder to use.
This conversation starts with crypto ATM scams, but it does not stay there.
Because the fall of major crypto ATM networks, including the bankruptcy of Bitcoin Depot, tells us something bigger about scam economics. When transaction caps, local regulations, and pressure from law enforcement start making one channel less useful, criminals do not just stop.
They adapt.
That is the part fraud teams should care about.
Marc and I talk through what happens when thousands of crypto ATMs go offline, why Bitcoin ATM scams became such a useful liquidation path, and how organized fraud groups shift into other methods when one door closes. We also get into AI social engineering, digital extortion, teen sextortion, and the simple but very effective scam formula that shows up again and again: the hook, the story, the urgency, and the payment.
Because scams may look different on the surface.
But the mechanics are often very familiar.
What you’ll hear in this episode:
- Why crypto ATM scams became such a useful tool for organized scam groups
- What the Bitcoin Depot bankruptcy reveals about the business model behind crypto ATM fraud
- How scammers react when a favorite cash-out method becomes harder to use
- Why AI social engineering is accelerating phishing, voice cloning, and scam personalization
- How the scam formula explains the hook, the story, the urgency, and the payment
- Why “pause, think, verify” can interrupt the psychological pressure behind scams
- How digital extortion and teen sextortion are changing who fraud education needs to protect
You should listen to this episode if you:
- Work in fraud prevention, scam prevention, payments, crypto fraud, or investigations
- Want to understand how criminals use crypto ATM scams and Bitcoin ATM scams to move money
- Are tracking AI driven scams, generative AI scams, or social engineering scams
- Care about elder fraud, digital extortion, teen sextortion, and fraud awareness
- Need practical fraud education themes that help people recognize pressure before they pay
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
This episode is about what happens when one of scammers’ favorite cash-out tools starts falling apart.
Crypto ATM scams have been a major problem because they gave criminals a fast way to convert victim pressure into irreversible payments. That is why the collapse of major crypto ATM networks matters. It is not just a business story. It is a fraud ecosystem story.
When a cash-out method gets disrupted, criminals do what they always do.
They look for the next path.
Marc and I talk through how organized groups adapt when regulations, transaction caps, bankruptcies, and enforcement pressure start changing the economics of crypto ATM fraud. We also connect that shift to the larger scam landscape, where AI social engineering is making old tactics more convincing and easier to scale.
The throughline is simple: scam mechanics still rely on pressure.
The tools may change. The channel may change. The payment method may change. But the core formula is usually the same. A hook. A story. Urgency. Then the payment.
That is why fraud education has to go beyond “watch out for scams.” People need to understand how the pressure works before they are in the middle of it.
Why crypto ATM scams became such a useful cash-out method
Crypto ATM scams worked so well for criminals because they reduced friction at the exact moment scammers needed the victim to act. Once the victim was scared, confused, or pressured, the ATM became the payment path.
That is the important part.
The fraud was not just the machine. It was the psychology wrapped around the machine. The scammer created urgency, directed the victim to the ATM, stayed on the phone, and walked them through the transaction before they had time to slow down.
Crypto ATM fraud became useful because it made the scam operationally simple.
- Crypto ATM scams gave criminals a fast way to move victim funds
- Bitcoin ATM scams often relied on urgency, fear, and live coaching
- Irreversible payments made recovery difficult for victims
- Scam prevention has to focus on the pressure before the payment happens
What the Bitcoin Depot bankruptcy tells us about scam economics
The Bitcoin Depot bankruptcy is important because it shows how much fraud pressure can sit underneath a business model.
When regulations tighten, transaction limits shrink, and local oversight increases, the economics can change quickly. If a channel depends heavily on high-dollar scam payments, then reducing those payments can expose how fragile that model really was.
That is not exactly subtle.
For fraud teams, the bigger lesson is that criminals build workflows around whatever channels make liquidation easiest. When one channel becomes harder to use, they do not retire. They redirect.
- Bitcoin Depot bankruptcy reflects pressure on the crypto ATM business model
- Transaction caps can reduce the usefulness of crypto ATMs for scam payments
- Organized fraud groups usually pivot when a cash-out path gets disrupted
- Crypto fraud prevention needs to track where money movement shifts next
Why AI social engineering makes scams harder to spot
AI social engineering is not creating an entirely new scam playbook. It is making the old one faster and more convincing.
That matters.
Criminals can use generative AI scams to create better scripts, cleaner messages, more believable impersonation, and more personalized pressure. Voice cloning, phishing, fake authority, and emotional manipulation all become easier to scale when attackers can generate better content faster.
The danger is not just volume. It is believability.
A scam that once sounded clumsy can now sound polished. A message that once had obvious red flags can now match tone, timing, and context better than before. That gives victims fewer obvious cues to question what is happening.
- AI driven scams make social engineering more personalized
- Generative AI can improve scam scripts, phishing messages, and impersonation attempts
- Fraud education needs to teach behavior patterns, not just red flags
- Social engineering scams are harder to disrupt when they feel familiar and urgent
How the scam formula helps people recognize pressure
One of the most useful ideas in this episode is the scam formula.
The hook.The story.The urgency.The payment.
That framework matters because it gives people something simple to remember when they are under pressure. And pressure is the point. Scammers do not want people thinking slowly. They want them reacting quickly.
Right.
The hook gets attention. The story explains why the situation matters. The urgency prevents the victim from checking. The payment moves the money before the person can recover their footing.
That is why “pause, think, verify” is so practical. It interrupts the formula.
- The scam formula helps explain how criminals move victims from contact to payment
- Urgency is often the signal that someone is being manipulated
- Pause think verify gives people a practical way to slow the scam down
- Fraud awareness works better when people understand the mechanics of pressure
Why fraud education has to expand beyond seniors
Elder fraud remains a major part of the scam conversation, and it should be. But this episode also looks at how digital extortion and teen sextortion are affecting younger victims, especially teenagers.
That is an important shift.
Scam prevention cannot only be built around one demographic. Different groups are targeted in different ways, but the mechanics are often related: trust, shame, fear, urgency, isolation, and pressure to pay.
Teen sextortion is a painful example of that. Criminals exploit emotion and embarrassment, then move quickly before the victim feels safe asking for help.
Fraud education has to account for that reality.
- Elder fraud and teen sextortion both rely on pressure and isolation
- Digital extortion can move quickly when victims feel shame or fear
- FBI IC3 data shows why younger victims need stronger fraud education too
- Scam prevention should teach people how to ask for help before payment happens
Final takeaway
The fall of crypto ATMs does not mean scams go away.
It means one tool gets harder to use.
When that happens, criminals move. They look for the next payment path, the next pressure point, the next story that works. That is why fraud prevention has to focus on both the channel and the psychology behind the scam.
Crypto ATM scams matter because they show how fraud groups turn urgency into money. AI social engineering matters because it makes that urgency more believable. And the scam formula matters because it gives people a way to recognize the pattern before they are too far into it.
The goal is not to make every person a fraud expert.
The goal is to give them enough pattern recognition to pause.
Sometimes that pause is the thing that breaks the scam.
Connect with Marc Evans | LinkedIn
- Fraud/Cyber Crimes Detective
- Founder of Fraud Hero
Connect with Karisse Hendrick | LinkedIn
- Host of the Fraudology Podcast
- Award-Winning Cyberfraud Expert
- Ecommerce Fraud Prevention Consultant
- Startup Advisor, Keynote Speaker, and
- Consultant to Fortune 500 merchants
Episode transcript
Karisse Hendrick
00:04
I've been looking forward to this.
Mark Evans
00:05
Me too.
Karisse Hendrick
00:06
This would be fun. Yeah, like you said.
Karisse Hendrick
00:14
Welcome to Fraudology Podcast, where we dive into the science and study of online fraud from the perspective of an e-commerce fraud fighter. I'm Karisse Hendrick. Welcome back to Fraudology. I have with me today Mark Evans, and if you are on LinkedIn, you should know who Mark is. He is a detective in Las Vegas. He also is the founder of Fraud Hero. He does a lot of fraud training. Whenever I see or learn about something new that I haven't heard of before, some new twist on a fraud or scam, I always am contacting Mark to ask him for more details, because he really is at the front lines in his day job, and also then carries that out in Fraud Hero by training companies and organizations on new scams. So I invited Mark back to talk. It's been a little while. I think it's been a little over a year since the last time he was on the podcast, and we're both very busy, but he's gotten so much busier with traveling and speaking at lots of conferences. So, Mark, welcome back to Fraudology.
Mark Evans
01:19
Thank you for having me back. I appreciate it. I've been looking forward to this.
Karisse Hendrick
01:22
Me too.
Mark Evans
01:23
This will be fun. Yeah, like you said, it's been very busy since the last time we spoke. We did see each other at Fraud Fight Club, and that was amazing. But yeah, it's been very busy, especially the last month. We talked about spending a lot of traveling and a lot of training, but that's good, though. That means a lot of fraud awareness and scam awareness is being taught to different businesses and banks and investigators, and we can work towards working together and stopping scams and fraud.
Karisse Hendrick
01:49
Yeah, it's so cool to see. I remember when you just started posting on LinkedIn at first, and you know, even before you started Fraud Hero, and so it's really cool to see that trajectory and just how many people have received your training. And you do such a good job at it, of explaining kind of the anatomy of scams and how they work, and what can be done to prevent them, both for companies and organizations, as well as for consumers. I think you do a really good job at, you know, education for both.
Mark Evans
02:19
No, thank you. I appreciate it. I remember when I first started on LinkedIn, and before I started really getting active, and I was thinking to myself, who's going to actually, you know, pay attention to what I'm saying? But who cares? I'm just going to write there, I'm just going to put things out there, and things that I want to share, and things that I'm seeing. And it's grown substantially. I've made a lot of friends. I met you through LinkedIn, which is amazing, and it's just grown. It's helped me be able to reach out to so many people and help so many different people, so that's been a huge thing for me. So I am a big advocate of utilizing LinkedIn, but yeah, it's just been a great journey so far, and I don't plan on slowing down anytime soon, so I'll be getting busier over time.
Karisse Hendrick
03:06
Yes, yeah, it was just really hard to imagine right now.
Mark Evans
03:10
Yes, and being better at managing time, so got multiple, you know, multiple hats that I'm wearing.
Karisse Hendrick
03:15
Well, you do have a full-time job and a family, and you're running Fraud Hero, and, you know, sometimes I notice how much you post on LinkedIn. I'm like, how does he have the time to do that? Because I am really only posting once or twice a week right now.
Mark Evans
03:29
It's not easy. It is. If I see, I just see an article, and I'm like, oh, I got to talk about this story, or I come across a new scam that maybe I've investigated, or something like that, and I'm like, I got to put this out because people need to know about it.
Karisse Hendrick
03:42
Yes.
Mark Evans
03:43
And if it's some breaking story, and I feel like I have some input that I can say on it, to give my, you know, my perspective on it, I think that's just helpful for anyone, whether you disagree or not. You know, if someone's like, "Hey, I don't see the same point of view," I'm like, "That's great, let's talk about it, because I want to understand your point of view as well." So that's what I'll keep, I'll keep posting and talking about fraud and scams, probably for the next 50 years.
Karisse Hendrick
04:09
Right. Well, speaking of that, and just how passionate you are about sharing relevant fraud and scams, one of the things that you've posted about consistently, and rightfully so, and I'm glad that you keep it at the forefront of a lot of people's minds, is crypto ATMs.
Mark Evans
04:28
Yes.
Mark Evans
04:29
You know, if anyone's been to, like, a little, you know, mom and pop grocery store or gas station or something like that, maybe you've seen a crypto ATM and wondered why would anyone bring their cash to this little hole in the wall and turn it into Bitcoin. And, you know, for a long time they all saw it as just an extra money maker, and but what, what it turns out is that they're primarily, I think, I don't know the percentage, but I don't know if you do, but, you know, they're primarily used to fund terrorism and organized crime, and they're primarily used for victims to be able to bring their cash in and send it, transition, transfer it into Bitcoin or some other type of crypto asset, and then send it internationally.
Mark Evans
05:17
Yeah, and when I first came across crypto ATMs, like they've been around for more than a decade, but I first really started seeing them after the pandemic happened, and that's because scammers figured out different ways to be able to target individuals. And with the, you know, sudden influx of crypto ATMs across the U. S., I think just at the beginning of this year we had over 31,000 crypto ATMs in the country, but with the influx of that happening after 2020, it became a key tool for someone, a scammer, or these criminal organizations to be able to use. And I really started seeing it right after then with every type of scam. It wasn't just, no, the romance scams or investment scams. I was seeing it when businesses were falling victims to scams, where their employees were being tricked into making a payment, thinking they're doing it on behalf of, you know, the supervisor or the CEO of a company. I said the mystery duty scams, the toll booth scams, the USPS, like they were all being guided to the crypto ATMs. So when I started seeing it, I go, I need to learn a lot more about these, and I really started digging into it in 2023 to learn as much as I can about how they operate, why they exist, who's using them. And one common thing that I kept seeing is it was either an elderly person that was using it or someone who was possibly a criminal that's laundering the funds. It was, I would never get an answer to say, who are the legitimate customers? Yeah, and when I would talk to the businesses, I would ask them, hey, do you ever see anyone come in and use this machine? And their response was always, oh yeah, someone in their 50s or 60s or 70s, and they were at the machine for hours. It was never a quick transaction. It was always, oh, I saw the person there, they were there for an hour or two, and they were on the phone with someone. And that was one of the key factors. Why is this person, why is the commonality that they're there for hours, they're on the phone with someone, and they're being coached to how to use the machine? Because they've never used it before. Now, why have they never used it before? Because they're not legitimate users of crypto ATMs, or there were never really any legitimate users of crypto ATMs. And that really started to come to light last year when a lot of these states and legislatures started looking at this and saying we need to do our own investigations. And they were finding out that upwards of 96 to 98% of transactions going through these machines were scam related. So to see those numbers really made me want to do something about it, because I saw how I was dealing with these scams every single day. As a detective, I can tell you right now, I was getting, I'm still getting multiple scams involving the crypto ATMs a week, to the point at one point it was almost daily, I would get at least one report of someone using a crypto ATM. And then that's why I researched, you know, like the numbers. So, in 2025, just to go on stats, in 2025 there was a total loss of $389 million just involving crypto ATMs, and that's the reported amount. The amounts could be way higher because a lot of people don't report them for various reasons. They don't know they're involved in a scam, or they could feel shame or guilt because they were, you know, tricked into sending money, but those were the stats. And that was an increase from the previous year. The previous year, I believe it was around $246 million, so it was, no, $140, $150 million increase just year over year. But states have now started putting laws and regulations into place to either mitigate how much somebody could send or just outright banning them, and I know three states have outright banned crypto ATMs in the state. So that's been huge on helping the citizens not become victims of these scams. And that doesn't mean that scammers will stop, because they may try to find some other avenue, which they typically will, but this at least stops one of the primary tools they use.
Karisse Hendrick
09:07
Yes, yes, it makes them have to go somewhere else, it makes them have to figure something else out to try to get, you know, funds from victims.
Mark Evans
09:15
And then one of the biggest things, and this came out, you know, earlier this week, was Bitcoin Depot. Yeah, and if somebody hasn't heard, if you haven't heard of Bitcoin Depot, they, well, they were, I could say that now, they were the largest crypto ATM operator, and they were even a publicly traded company. Most people don't know that they were actually, they're actually on the stock exchange.
Karisse Hendrick
09:41
Wow.
Mark Evans
09:41
But that's how much money they were benefiting from. I consider they were probably one of the most common ATM companies that I would see in these reports of scams, because they were just all there, were just everywhere. They had more than everyone else, but they recently filed bankruptcy, and that most likely came as a result of states actually putting regulations in to help protect the citizens. And now you have to ask that question, if they had so many legitimate customers, that regulations that would protect customers should not have impacted their business in that kind of way. And with reducing the amount of money that victims will be sending through those crypto ATMs, it made a huge dent in their business operations and their revenue, because they were benefiting from it, whether they wanted to admit it or not. But they actually closed down over 9,000 crypto ATMs in the country, and that's almost a third of the crypto ATMs throughout the country.
Karisse Hendrick
10:38
Wow, so did they close them down by shutting off the software, or did they go and retrieve them, or...
Mark Evans
10:45
They haven't gone and retrieved them that I've seen. When I got the news, I actually went to a store, because I know where their crypto ATMs are, so I wanted to know if they actually took them offline. And I went to the store, and they don't, they're not in operation anymore. The screen is still there, so it allows you to click on some of the things, but it won't allow you to get through all the process. It'll actually say this one is out of operation, or it lets you put in, you know, a phone number, but then it'll stop. It'll just freeze, it'll reset. So it doesn't allow anything to occur on the machine. And they even took it off their website. I went to their website and the location finder, to where you would actually have to go and say find me the closest crypto ATM, or Bitcoin Depot ATM. It's gone from their website, so they are legitimately closing down the crypto ATMs. But for me, that was very exciting to know so many people, it's going to save so many individuals' life savings, their 401(k)s, their businesses themselves, because I've seen a lot of employees lose their jobs because they thought they were told to take money from their cash register and deposit it into the crypto ATM within their own store. So it's going to save a lot of people a lot of headache, a lot of, you know, money, and just even a lot of investigations. Now, we will lose, as a detective, we will lose some insight into what these scammers are doing, because now we don't have that information coming in. But I would still rather reduce the amount of money being lost to citizens than getting information for the investigation itself, right? And I think this is huge for me. That's huge. I'm probably going to reduce my caseload a little bit, hopefully, which I'm happy about. But I've been a huge advocate of speaking out against these machines being used as tools to hurt our citizens.
Karisse Hendrick
12:26
Yeah, I was just thinking about the criminals on the other end of the call when they're walking a victim through, you know, going to a Bitcoin Depot ATM, you know, now that they're bankrupt, and how frustrated they have to be, you know, that they can do some things, but they can't actually transfer money, and that just put a little smile on my face.
Mark Evans
12:47
Now they will try other ways, and I know this from experience, because I've actually, I pretended to be a victim at one point with someone who was trying to guide me through a scam. So I had the phone number that a victim had used. I decided, myself, like, let me just reach out and see what they'll say to me. And so they were texting me and telling me to go to a crypto ATM, and so I was like, you know what, I'm going to let them walk me through the process. And they told me to look up on my own map and say, hey, where's the closest Bitcoin ATM? And they said, go to the ATM. And I went there, but I played it a little bit smart, and I printed out my own out of order piece of paper.
Mark Evans
13:29
And I stuck it to the machine, because they kept asking for photos, yeah, of things. And so I told them the machine was out of order, and then I sent a picture of that being on the machine. It wasn't really out of order, but then they guided me, they wanted me to download an app, they wanted me to download Cash App, and they were, okay, just download Cash App. Well, I don't have a Cash App account, and they were willing to walk me through creating a Cash App account, because you, as most people may not know, but you can actually purchase Bitcoin on Cash App. But to do that, I would have to go sync my bank account, so I have to go to the bank, deposit money, transfer to my Cash App account, or link a debit or credit card to the account, and then send money. But they were trying to guide me through just another process in that same time frame. So the ATMs being removed won't stop them. They will try other methods, but it reduces this, removes this tool from being available to them.
Karisse Hendrick
14:21
Yes, and it makes it more difficult, and hopefully, you know, maybe the act of downloading Cash App and having to go through all the verifications and everything else, maybe that gives the victim time to go, wait, this doesn't sound right, you know, maybe I'm being optimistic. But I was actually going to ask you that, as far as, you know, with these crypto ATMs going down, where are they going to go next? Because, as we know, fraud doesn't just go away, it's like a balloon, right? You squeeze it in one area and the air goes somewhere else. And I was thinking about just those money movement apps as well, Cash App, Venmo, Zelle, et cetera. They've done a lot over the years to try to prevent this from happening, but there's also a long way to go, and they're not all the same. Some of them have done more than others to prevent this. I'm being diplomatic, because I think some of them listen to the podcast, but they know who they are, and if they don't, they can ask me. I'll tell them. I've had that happen before with BNPLs, where one time I said, you know, these buy now pay later organizations, some are better than others, and I had two of them reach out to me and go, "Is it us? Are we the bad ones?"
Mark Evans
15:27
They want to know. Yeah, fix it.
Karisse Hendrick
15:31
But actually, the fact that they were worried that there was them, they weren't the ones, you know, they were, yeah. I think the ones that, no, no. But that also is good for people in banking to see, to know where they're headed, right. So, you know, you may not see a large cash withdrawal and then going to the Bitcoin ATM. You wouldn't see the Bitcoin ATM, but you won't see those large cash withdrawals from victims as much. But you will see, you know, transfers to these peer-to-peer payment apps more often as a result of these scams. I think that's important to be aware of too.
Mark Evans
16:05
No, it definitely is. They are going to pivot, like wire transfers and ACH have always been one of the primary tools they use to get large funds and large transactions. But you will, like you said, you're going to see more towards the peer-to-peer payment apps, Cash App, Zelle, Venmo, PayPal. They're going to start utilizing those, and there's a bunch of other ones too that are out there that they utilize, depending on what country scammer may be from, or they have access to. So they're definitely going to shift towards those. They're still going to use cryptocurrency, but they may use it as a part of something else. They may send wire transfers to maybe a crypto exchange, and then have someone transfer the funds to them through, like, Coinbase or Crypto.com or Kraken or one of those major exchanges. So they're just going to pivot. They're just going to change the direction or the platform that they utilize until something else comes up, and when that does, they're going to try it. They're going to know it better than we do because they, when I say they, I mean scammers and threat actors are going to experiment with a lot less scrutiny than we have, as, you know, fraud investigators and fraud fighters, because, of course, we use it within certain parameters, where criminals are using it to see or figure out exactly what they can do and how they can do it, and what's the fastest route they can get someone to send money. And so I don't, unfortunately, with scams, I don't see scams slowing down themselves, and I know we're going to talk about that in a little bit of what's going to...
Karisse Hendrick
17:31
Yeah, accelerate them.
Mark Evans
17:32
What's going to accelerate them, what's going to scale them. And so I just, I know as a detective, my job is not going to go anywhere, but that also means I also get to learn more, and I think education is key to being able to teach everyone else, because when you take away the ability to trick someone, you take away the scammers' power.
Karisse Hendrick
17:52
Yeah, you cause them to think things through and take away the sense of urgency, and go, "Wait, does this make sense? This is happening, you know? I'm about to give them a lot of money. Does this make sense?" When you power them with education. Yeah, I think you're right. I mean, it's exciting that Bitcoin Depot is filing bankruptcy because they can no longer profit off of scams the way that they have been. But to your point, we will see the cash-out part of scams move across the ecosystem to other areas. I think it's important for people that work for those peer-to-peer apps, payment apps, or in banking as well to be aware of those things, right? To be aware of where it's moving to, you know. Let's talk about how easy it is now. Like, what's elevating fraud and scams. You're about to do a presentation for the ACFE National Conference. That's a big deal. I've applied to speak for them in the past, and they denied me. So, so I think it's...
Karisse Hendrick
18:55
Got changed.
Karisse Hendrick
18:56
Right? Yeah, so, you know, I mean, it was back in 2019, but still I had never been told that somebody didn't want me to speak at their conference before. I was like, hey, wait a second, usually people pay me to speak at their conferences, I'm offering to do this for free, wow. But, you know, it's all good. I ended up going to an even better conference that same week and getting an award that changed a lot of my career, so it ended up being a good thing. But, you know, it's a big deal that you're doing this presentation. I wanted to definitely highlight that, and you're doing it on just how much AI is being used to scale fraud, as well as to make it easier. So, I'd love for you to talk a little bit about that and what you're seeing. It sounds like they're talking about it before recording it. Just, it sounds like gasoline on a fire.
Mark Evans
19:46
Yeah, it's going to be so. I am very excited to be speaking at the conference again. Actually, I had the chance last year.
Karisse Hendrick
20:01
Oh, good.
Mark Evans
20:05
That was my first time speaking at the conference, and that was amazing. And I got invited back this year. Karisse Hendrick: Good job, yeah. Not surprising. Mark Evans: So, this year we'll be speaking on how AI, social engineering, and cryptocurrency are being used together in order to scale scams and fraud, and that's just something that I'm seeing more on a daily basis. Social engineering and cryptocurrency has been, you know, going hand in hand for quite some time now, but with the increase and how AI has just blown up over the past few years, and how the capabilities of AI have just exploded the way that scams have, it has scaled scams to a level that we probably didn't think we would see. And there's several reasons for that. One is the scalability of having the automation to be able to do something. So, like with AI, you can automate now email, like phishing emails and text messages, and even phone calls, because now you can clone voices or just give it a script, and it'll respond. It'll have a conversation with the victim, and if scammers have time, which they do, they can train an AI to have these full-on conversations with victims regarding scams and how to guide them through the process with someone never knowing that they weren't talking to an actual person. And so I'm definitely going to be, you know, talking about that. But it's just overall, AI-enabled scams has become just a mainstream thing. I played, I've played around with AI, and I've been able to, I think I put a video on LinkedIn not too long ago, maybe like last, like, three, four months, I put a video out where I was able to make an AI video of me sitting right here, you know, and it took me less than a few minutes to turn me into someone who looks completely different. And it was free, it was completely free. There was no cost to bear. So you can imagine if someone's making a lot of money, what they can do with the paid resources of AI. And we think AI, we think things like ChatGPT, Google Gemini, Claude, and in those aspects, but there's so many different AI tools that people use to make video, to clone voices, to make scripts that are out there and available, that you have no idea what you may interact with. And if you combine AI with social engineering, it is a deadly combination. You can really, they are really doing damage with utilizing AI at scale. And even, like, you think of romance scams and investment scams, where they're impersonating celebrities and models and all different things. Sometimes the people they're impersonating are not even, you know, famous people. They're just AI-generated images that, that they just make it look a certain way. I can't tell you how many times that somebody's probably impersonated Keanu Reeves. Karisse Hendrick: Oh yeah, yeah, and we know there's a book out there. Mark Evans: Yes, there's a book, yeah, yeah. Keanu Reeves, Brad Pitt, Jason Momoa, like, always, you know, celebrities or attractive people or politicians, and they're tricked into, you know, sending money. And it's just become that easy. So, I think AI is definitely going to change it, but we have to utilize it. And now, when I say AI, and we kind of talked about this before we started, but with AI, there's two sides of this. Now, AI can be very helpful. I am not against AI at all. I think it's a great tool, but AI can be used against us by scammers impersonating people, invoices, and creating fake emails and text messages and documents and everything you could think of. But then sometimes our use of AI and how much we use it can actually diminish our ability to be able to identify when a scam is happening. And what I mean by that is we have started to use AI for some of the smaller tasks that we would typically do every day, reading and analyzing emails or text messages, or even responding in emails, sometimes now are, you know, creating documents and pictures and images and infographics and all these different things that we now will use it for with a simple prompt. We've taken away our ability to critically assess something when we see it, and by not doing that as often, our brain now gets used to just, okay, my AI is going to look at the small things within the email and analyze it for me and give me a basic summary of what I'm seeing, right. Whereas, if you actually look at the email, you may see that the email domain doesn't look right, or that link in that email looks weird, or the way someone wrote this, or conjugated the words, doesn't look correct, and that would typically send off a red flag. With AI analyzing it and giving you a synopsis of what you just, you know, sent, it takes that ability away. And then now we respond to a scam or click on the link or something that we shouldn't, that we wouldn't normally have if AI wasn't doing that level of work for us.
Karisse Hendrick
24:56
Right, right, that's a good point. I think it also, you know, helps fraudsters get better at crafting those emails too. Right, when they're using LLMs, they get to, you know, craft those better and be able to, you know, make it so that, especially if English isn't their first language, they can, you know, have it translated so that it sounds like it's a native English speaker. Whereas, you know, before they were having to type it out themselves, and now they can put it in one language and have it, you know, output another language and sound so much better without those spelling mistakes. And I think a lot of people still remember the Nigerian Prince scams, where they were told if there's a spelling mistake, then it's fraud. Well, then on the flip side, they think, well, if there isn't a spelling mistake, then it isn't fraud, and that's just not the case. And so AI is also helping them get better at, you know, creating those, and not having as many mistakes to identify.
Mark Evans
25:53
Yeah, that is definitely one of the biggest things, that you can have someone who's in another country, like you said, who speaks very little English, and they can have it, you know, have perfect English, whether it's, you know, voice, a voice call, or in writing, and they use their advantage. I mean, even now they can have it to where you have live impersonations, where you connect, you can think you're actually talking to a person, and it'll appear as somebody completely different when you're on the phone with them, or a webinar, or whatever it may be, and it's just a live impersonation. And so that makes it more difficult to identify, because you go, "Wait a minute, I actually had a conversation..."
Mark Evans
26:33
With a person.
Mark Evans
26:33
And it was this, this is, I thought it was Elon Musk, or I thought it was, you know, whoever it may be, and you're like, well, no, I'm sorry, Elon Musk wasn't on the phone call with you on FaceTime.
Karisse Hendrick
26:45
Right.
Mark Evans
26:46
And I've seen a lot of our, especially our seniors, will say, like, no, it was really the person, and I believe that they were, they wanted me to invest in whatever they, the scammer, decided it was for that day, whether it's gold or cryptocurrency or some stock or something. And they guide them to a website, and the website looks real. AI can make websites in minutes now.
Mark Evans
27:07
Within 10 minutes, yeah, or less.
Mark Evans
27:09
Or less. Yeah, you type in a prompt, and you're like, "Hey, well, make me a website that looks exactly like this website," and you send a link to that website, and it just clones it. So, and as I said, criminals are using this way in different ways than we use it. We may use it in emails and text messages, and making infographics and graphs for us, and all different things. They're using it to go, "Well, I need to make me look this way, I need to make me sound this way, and generate that for me." So it is definitely going to continue to grow.
Karisse Hendrick
27:38
Yeah, you bring up some good points. I mean, one of them being that already people have lost, you know, combined millions, if not billions of dollars to romance scams when they weren't able to even have a video call with that person on the other end. Now they can say, well, I've been FaceTiming with him for, you know, weeks, and so I know he's real, and I know that he is real, and so that's why I'm going to send money. Like, it makes it more believable. And on the flip side, AI has reduced the barrier to entry into fraud too. Whereas, you know, maybe you had to be a sophisticated coder to do some of these things, you know, to create a new website, a phishing website, or, you know, you had to have years and years of experience in, you know, social engineering or other things. You can now just have, you know, Claude or Copilot, or whoever, you know, ChatGPT, whoever it is, do it for you. And now that's why we have, you know, 14, 15-year-olds, and, you know, creating these big scams, and also a lot of, you know, foreign nationals that don't speak English as a first language that are very successful in scamming Americans.
Karisse Hendrick
28:47
And it's interesting that you bring up the younger generation of being able to do this, because when I was 14, cell phones weren't even a thing.
Karisse Hendrick
28:57
I mean, they were, but smartphones were, like, the iPhone didn't come out. I graduated.
Karisse Hendrick
28:58
So, but now you have a 13, 14-year-old who can, has the ability to create their own scam website. If someone under the guise or under the guidance of maybe someone else who's older, or maybe they start off, you know, doing it themselves, and they're like they're hackers technically, and they start experimenting with it, and thinking it's fun. And then it starts from, oh, being fun, and I'm just making a funny video of my friends, to, oh, how can I trick someone into, you know, sending me money, because I don't have a job yet and I want money. So, oh, and it becomes a lucrative thing, and then it grows and grows. Some of the biggest data breaches that we see today are done by teenagers.
Mark Evans
29:45
Yeah.
Karisse Hendrick
29:45
And they're just gathering information, or they're doing it to get paid, and they'll have these, you know, groups that'll say, hey, are, but ransomware is huge. Some of the biggest ransomware attacks that I've seen are carried out by teenagers, and, you know, and they receive millions of dollars for hacking, you know, large corporations. And so, like, say, but you said the scale of it is just so high from all different levels that it's become a detriment. And even in speaking of teenagers, there's even new stats that have come out. I know the FBI did this. This was the first time I've seen it in their IC3 report, where they actually had an entire section based on victims being under the age of 17.
Mark Evans
30:30
Yes.
Mark Evans
30:30
And that was huge, because we are seeing an influx of, and we're talking about AI and social engineering, where we see an influx of teenagers, really a lot of teenage boys who are being extorted, and, you know, it's costing them money and their lives, unfortunately. But they're being targeted using AI scams. So it's not the romance scams that we normally see with the older generation. It's the 15-year-old boy who's being extorted and told that, you know, the scammer is going to ruin their life if they don't send them money. And, you know, being 15, 16 years old, you're thinking that's the end of the world. And fortunately, they, you know, they end up doing something that ends up, you know, unfortunately, ending their life, all because some scammers use AI to trick them. And so, the understanding of how these scams work, I think, is so important, not just for the older generation, but for the younger, for the kids. And we have to have those conversations with those middle school and high schoolers to say these are things that you're going to have to be aware of, just as much as we say the elderly community needs to be aware of it. So, I know people have a lot of focus throughout the country on the elderly scams, but there needs to be a focus on how these scams affect our youth as well. And I know there's some people who do not, I think Paul Rafel...
Karisse Hendrick
31:45
Is Raphael, yeah.
Mark Evans
31:46
Raphael is huge when it comes to that, and Billy being a big advocate for that, and I love him for that. So I think that's something else that we have to really focus on.
Karisse Hendrick
31:56
Yeah, no, I couldn't agree more. I think that one of the biggest antidotes to all of these different types of scams is education, and I think that's why, you know, what you're doing with Fraud Hero is so important. In addition to education and just pure vigilance, what are some other things that people can do to try to combat or identify when AI is being used in the fraud scheme, or maybe it's not to identify that AI is being used, but just to identify a scam, right? Like, now that they're being superpowered.
Mark Evans
32:29
Across my time of investigating scams and teaching about scams, there's been an underlying thing that I've seen that happens in almost every scam, and I call it the scam formula. And these are four elements that I see in almost every scam, and I say there's a hook, there's a story, there's urgency, and there's payment. And what I mean by that, when I say a hook, I think of something like a headline. A hook is going to pull you in. We use hooks every day. It's used in marketing. It's used when we write LinkedIn posts. It's used in news articles. And scammers utilize this to say, what do I need to do to pull this person in? And that could be that text message that says, you, you know, you owe this money for going through a toll booth, your USPS package isn't getting delivered, you missed jury duty, so you're going to be placed under arrest. That initial hook is in almost every type of scam. And after they get the hook in, there's a story that comes along with it to make it more believable, and that story could be, well, this is why you're placed under arrest for missing jury duty. You got called to it, and here's the fake arrest warrant with your name on it, because they'll send an arrest warrant that looks like a real arrest warrant with your name on it. And they build this very believable story that now this person thinks, what am I going to do? My life's going to be over. I got to get arrested. I owe this money. My bank account's going to be frozen. I'm not going to have access to go buy groceries and food and things like that. And then once they've done the hook and they've built their story down, they create this sense of urgency and they're saying you have to act right now, or there's going to be some kind of punishment, or financial ruin, or some kind of threat that is going to make this person think I have to react and do now, and don't talk to anybody.
Mark Evans
34:12
Yeah.
Karisse Hendrick
34:12
And then once they've been able to create a high enough sense of urgency where this person is going to react without thinking, the finish line is always the payment, and that payment can come in different forms. We've talked about throughout this podcast. It's wire transfers, ACH, peer-to-peer transactions, cryptocurrency, cash couriers showing up at your door. It's all these different methods they use to get the payment. Their ultimate goal is to get the payment. So, for me, I think it's understanding and recognizing that that four-step formula is in almost every scam. And with seeing that, what I tell people now is I use the term pause, think, verify, when it comes to a scam and someone trying to trick you into doing something. I always tell somebody when something comes across like that, just pause and take a breath. And just that moment of pause will give some clarity as to what is my next step. And as they're thinking about that next step, of course, they think that you're asking themselves certain questions. Is this too good to be true? Is this normal? Is it unexpected? When you start asking yourself those questions, and your gut is telling you something doesn't seem right, and most of the time in scams, when your gut is telling you something doesn't seem right, it's usually true.
Mark Evans
35:25
Yes.
Karisse Hendrick
35:25
Something is not right here.
Mark Evans
35:27
Yes.
Karisse Hendrick
35:28
And once you've got that, now you want to verify who you're talking to. Am I actually talking to law enforcement? Am I actually talking to someone from the bank? Am I actually talking to the celebrity that they're saying that they are, like Brad Pitt or Kevin Costner, right? Verify through independent means. That means contact the bank yourself, hang up the phone to contact the bank, hang up the phone or don't respond to the text message, and maybe look at your own, you know, mailing statements and go, am I expecting a package? Like, why would someone send me something from USPS? I'm not expecting a package. Just those different things to independently verify who you're talking to before you make any decision, especially when it comes to money.
Mark Evans
36:06
Such good advice. Yeah, and I think that verifying piece of calling your bank, or, you know, calling the police department that's supposedly talking to you about the warrant out for your arrest, you know, chances are they'll say no, there's no warrant out, like it's a scam, you know. Doing that verification piece is so important, but I think the pausing and the thinking is also so important, and it builds up to that verification point. Because, I mean, they're using, you know, scarcity tactics. They're using fear. They're using, you know, lures of more money. They're powerful, and they can make people kind of almost go into a spell and go into this autopilot where they aren't thinking. And so just taking a moment to go, does this make sense? Would it make sense for, you know, the, and how would they get my phone number? How did the toll booth, you know, how did me going through a toll get my phone number? How did they get my email address for jury duty? Wouldn't they have given me jury duty notice first? Like, you know, those type of things. But you aren't in the moment, you're not thinking about that, but that pausing and thinking allows you to start to question and go, wait, this doesn't make any sense. How would they know who to contact?
Karisse Hendrick
37:20
Yeah, exactly. I mean, I've driven through toll, and most time when people are driving through tolls, it's because they were on vacation and they were in a rental car. So they, wait a minute, it's not even, the car is not even tied to me. So, how would they, I mean, let's say they would have, the person would have to contact the car company, get a list of information from them, and then contact you, which is completely not going to happen. All they would do is they would charge a rental car company, and then the rental car company would charge it to you.
Karisse Hendrick
37:47
Yeah, great.
Mark Evans
37:48
And they'll go, "Hey, you drove through this toll, you didn't pay for it. Sorry, we're going to have to bill you for it." Yeah, not saying, "Hey, go to a crypto ATM or send us a bunch of money, and then we'll take care of it." Same thing with law enforcement. As I said, I've been in law enforcement for 14 years now. I can tell you right now, if you have a warrant, they're not calling you.
Karisse Hendrick
38:06
Right.
Mark Evans
38:06
To tell you that you have warrants. You'll find out you have a warrant when they're at your front door. So, and that's just being honest with people, like, police aren't calling people randomly and saying, hey, you have to pay for this warrant. I guess it's not going to happen. And usually, if you have a warrant, most people know that they have one.
Karisse Hendrick
38:22
Yes, that is true too. Yes.
Mark Evans
38:24
Most people are aware that they probably did something that resulted in them having a warrant, so, but yeah, but it's just different ways to verify, and I think that's very important to know.
Karisse Hendrick
38:36
And I think it's great. I hadn't really thought of that in, you know, I hadn't really thought of scams in those four parts that you explained, or, you know, really putting words to pause, think, verify, and an acronym to it. I think that's really smart and really important, because those are bite-sized pieces of information that consumers can remember.
Mark Evans
38:56
No, absolutely. And I'll try to put it to where I go out and I teach, and I do my classes and presentations. I try to put it in a sense that everyone can understand, because someone who deals with fraud, we, a lot of times, we talk in terms that we know as fraud investigators or fraud fighters, but the average person may not know what that means. And so I try to simplify it in a way that everyone can understand it, because I think it's very important for the average person to know. But what do you mean when you talk about phishing? What is phishing? What is smishing or vishing? I don't know those terms. Like when you say a wire transfer, cryptocurrency, some people may not know what cryptocurrency is. I can't tell you how many times that I've mentioned crypto ATM, and they go, "What does a crypto ATM look like?"
Karisse Hendrick
39:38
Wow.
Mark Evans
39:39
Because they've never paid attention, and like, it looks like an ATM, and they go, "Do you have a picture? Because I've never seen one." Or, "How do they work? Like, what do you mean? You put money in? Like, don't you normally get money out of an ATM?" And those are just different things to be able to explain at a very, like, at a base level, to where everyone can know what you're talking about, and not just professionals who deal with this stuff on a daily basis.
Karisse Hendrick
40:02
Yeah, yeah, absolutely. Because I think to your point, we need to get outside of our bubble to educate, you know, other people and not just talk to ourselves all the time.
Mark Evans
40:11
Yeah, absolutely.
Karisse Hendrick
40:13
Because, yeah, we all know how bad it is, but if we aren't talking to our friends and family about it too, or our kids, you know, then that can happen.
Mark Evans
40:22
Yeah, and I think that's very important. Talking to family and friends to help as many people as you know, you never know that one thing you say may be that thing when they pause and think, may go, wait a minute, Mark and Karisse talked about this. I remember them mentioning that. Wait, yeah, this is not right.
Karisse Hendrick
40:38
Well, funny story, I don't think you've heard of this yet, because it just happened a week and a half ago at Safeguard. Hailey Windham was riding back in an Uber from Colorado Springs to Denver, and that's about an hour, hour-and-a-half ride, and the Uber driver, you know, was making conversation and asked Hailey what she did. And so she, you know, explained that she's in fraud and scams, and then Hailey said something about crypto, and the driver said, "Wait, tell me more about that. What, you know, crypto investments and all that? How does it work?" And so Hailey was explaining, you know, what fraudsters will often say, you know, and do for crypto investments and all of that. And the Uber driver just started crying, and she goes, "I think I just fell for a scam." And she was like, "I think I just sent a bunch of money over." And Hailey was able to call up a friend of a mutual friend of ours that works at an unknown or undescribed, I won't say the name, but a crypto company that transfers money into crypto. And that was the company that the Uber driver had used. And so Hailey was able to, while she was in the Uber, talk to the head of fraud at this company and say, hey, this would never happen, right? Like, this is absolutely a scam, like, you know, this specific scenario, you guys would never ask them to do that, right? You guys would never, you know, say that if they invested more, they'd get more back, or whatever it was. And he was able to confirm, nope, absolutely not, that is not what we would do. And he was able to look up her account and was able to, you know, hold what he could. And it was just kind of a miracle that, you know, of all the Uber drivers in Colorado Springs, Hailey got that one. But you just never know when you're going to come across a victim or a potential victim, because we all are potential victims.
Karisse Hendrick
42:26
Everyone is. There is no one who is unscammable. I know some people think, like, oh, I never fall for a scam. Every single one of us, myself included, has the ability to be a victim of a scam, 100%. We all have trigger points that can be, you know, pulled, and that's various things. It could be cryptocurrency, it could be your family, it could be your career. Like, there's different methods and ways that a scammer can go after each and every one of us. So, no one is unscammable.
Karisse Hendrick
42:54
Right. I think that's a really good place to leave it. I mean, I think that's a really good takeaway, is I think we're all scammable. And I mean, I certainly have come close to clicking on that link, or, you know, close to doing something, because it makes sense, you know. And then it's like, wait, actually, does it make sense? Let me check out this person, let me do this, literally that, you know, that type of thing. As a business owner, I get so many of those texts and emails about, you know, your $40,000 line of credit just needs a signature, or whatever it is, and I've always known that those were scams, because I would know if I, you know, tried to get a line of credit. But then there's others, you know, with headhunters and talent, you know, talent scouts, and that type of thing for fraud jobs, right, like there's been a few that have been sent out to merchants, or, you know, top fraud people that I know of, where someone was asking them to join their board, and they almost clicked on it, and then went, wait, let me right click on this link, on this URL and see where it actually leads, and, you know, it actually led to malware, and would have, you know, probably put a keylogger on their computer. So you just, you're right, nobody is safe. We need to act like we're not safe, right? We can't just have this, oh, I'll never fall for it. It has to be, no, I have to continually think, pause, and verify to make sure that those things are right. I really like those terms.
Mark Evans
44:19
Absolutely. I'm glad.
Karisse Hendrick
44:23
No, I think it's great. Well, Mark, thank you so much for spending time talking to me. It doesn't surprise me at all that this time went by so quickly.
Mark Evans
44:31
I know, right?
Karisse Hendrick
44:32
You and I could geek out about fraud all day, but I really appreciate you being at the forefront, both as a detective and in your work with Fraud Hero. I know that it's a passion project for you. I know that you're really passionate about this and care deeply about people not, you know, falling victim to being scammed. And I will try to remember to include a link to your LinkedIn in the show notes, but, you know, for anyone to follow you or connect with you, if for some reason I don't, it's M-A-R-C Evans, and you can find him on...
Mark Evans
45:09
Yeah, that's one of them. I'm pretty active on LinkedIn, so...
Karisse Hendrick
45:12
Yes, yes, you are. It's a great place to find you and to learn more about. I learn all the time from your posts. It helps me stay on the forefront of just knowing what's going on, like, okay, if Mark's talking about it, chances are it's a big deal, or it's worth being aware of.
Mark Evans
45:29
So, thank you, I appreciate that. Yeah, you definitely find me there.
Karisse Hendrick
45:32
Yeah, I hope that some of our listeners will get to meet you at the ACFE conference in, is it June or July?
Mark Evans
45:39
It's in this July this year in Boston.
Karisse Hendrick
45:42
Okay, awesome. That's great. Well, thank you again so much for stopping by Fraudology. I appreciate you so much, and all the work you do, and we'll talk to you soon.
Mark Evans
45:50
Awesome, thank you. Bye.
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