CORPORATE LIABILITY FOR DEEP FAKES

WHAT ARE DEEP FAKES

Have you ever signed up for a free online product where all you had to do was enter your credit card information to pay a small shipping fee, or perhaps you purchased a weight loss supplement because it was endorsed on social media by a famous celebrity, only to find out that it was a scam and you didn’t receive the product, or the supplement was just a placebo? These promotions are created by scammers with new technology called deepfakes. A deep fake is an image, video or audio recording created with artificial intelligence (AI) to look and sound like a real person or object.

HOW DEEP FAKES ARE PRODUCED

• Statistical Learning: Computer software algorithms scan hours of real audio or video footage to learn and store the facial movements and expressions, voice tone, and movements of a person to create artificial intelligence (AI).
• Integration: The AI then generates a new image of the person’s likeness and pastes it onto a different body or creates a realistic voice clone.
• Evolving Technology: New generative AI produces real-time, high-definition face images and voice cloning that are greatly improved over previous versions and very hard to distinguish.
• Ease of Operation: Corporations have the equipment and the knowledge to create AI, which makes it easier to create voice and image deepfakes.

WHAT HARM CAN DEEP FAKES PRODUCE

Common Uses and Risks

• Entertainment: The technology to create deep fake images and sounds is put to legal and safe use in movies, video games, and dubbing.
• Fraud and Scams: Cybercriminals use deep fake video or voice calls to trick employees into transferring money or sharing private company passwords.
• Misinformation: Deep fakes of political figures can spread false news or influence public opinion during elections.
• Harassment: Non-consensual deep fakes cause explicit embarrassment and jeopardize private individuals and celebrities.
• Emotional Manipulation: Deep fakes can be designed to stimulate extreme anger, shock, or fear resulting in foolish action before thinking critically.
• Victim Trafficking: Naïve young and elderly people can be lured into dangerous and captive situations.

According To Research:

• Number of Incidents: 25.9% of executives report that their organizations have experienced one or more deep fake incidents.
• Financial Loss: 92% of companies have experienced economic loss due to a deep fake.
• Availability: Accessibility of generative AI technology is only growing, lowering barriers to entry for deep fake creation.

WHO CAN BE HELD RESPONSIBLE FOR DEEPFAKES

Corporate Resources to Detect Deep Fakes

• Modern corporations have the technology, equipment, and access to industry-wide threat intelligence to implement identity verification processes.
• Deep fake videos of corporate managers could impact market perception and create securities risks.

Corporate Obligation to Protect Its Customers

• Corporations process online payments from their customers.
• Technology makes traditional scams more sophisticated and harder to detect.

Potential Litigation

• Fraudulent deep fakes create the potential for consumer protection litigation.
• Courts are more willing to hold corporations responsible for third-party fraud against customers.

Deep fakes created by AI are an evolving issue. Corporations and courts are working to find solutions that will protect customers without placing an unreasonable burden on corporations. The corporate lawyers at Corporate Securities Legal LLP are following the latest developments so they can adequately advise and protect their clients.