Japan is preparing to use generative artificial intelligence to detect investment fraud earlier, with the country’s Consumer Affairs Agency planning to analyse thousands of complaints for warning signs of suspicious schemes promising high returns.

How will Japan use AI to fight investment fraud?

The Consumer Affairs Agency said it will strengthen efforts against investment and other fraud promising lucrative returns by using generative AI to improve information analysis.

A new group established within the agency will use the technology to identify schemes that share patterns with previous fraud cases and malicious business operators. The aim is to spot potentially harmful operations earlier and allow authorities to intervene before losses grow.

What types of investment schemes will be targeted?

The agency announced measures against schemes that attract large amounts of money by promising high returns before eventually collapsing.

The AI-based approach will examine similarities between newly reported cases and past fraudulent schemes. By identifying recurring characteristics, authorities hope to recognise suspicious operations before they cause wider financial damage.

Why does Japan want to detect these schemes earlier?

Consumer Affairs Minister Hitoshi Kikawada stressed that recovering money can become difficult after victims have already suffered losses.

“Once damage occurs, it will be difficult to recover, so it is important to respond quickly,” Kikawada told a press conference.

The initiative is therefore focused on identifying warning signs at an earlier stage rather than relying only on action after consumers have already lost money.

How many consumer cases will the AI analyse?

The new group will operate a generative AI system to analyse cases reported to the National Consumer Affairs Center’s information system for consultation.

The system receives around 900,000 cases annually, giving authorities a large pool of consumer reports that can be examined for recurring fraud patterns and suspicious activity.

What warning signs will the system look for?

The AI system is designed to identify suspicious schemes and detect early signs that a business could fail.

It will analyse distinctive solicitation phrases and other characteristics extracted from previously reported cases. These indicators can then be compared with newer complaints to help authorities identify possible risks.

What could the AI system change for consumers?

The initiative is intended to help authorities move faster when similar fraud patterns begin appearing in consumer complaints. Earlier identification could give officials an opportunity to examine suspicious schemes before they expand and cause larger losses.

For consumers, the development also highlights the importance of caution when approached with investment opportunities promising unusually attractive returns. Suspicious offers should be examined carefully, particularly when they resemble schemes built around promises of high returns before eventually collapsing.

About the author — Ayesha Aayat writes on cybercrime, digital safety, and emerging online threats. Her work focuses on public awareness, legal clarity, and technology-driven risks.

San Francisco City Attorney David Chiu has issued cease-and-desist notices to Apple and Google, directing both technology companies to remove a number of AI-powered “nudify” applications from their app stores within 28 days or risk potential civil penalties under California law.

The legal notices target 13 applications—eight available on Apple’s App Store and five on Google Play—that authorities say can generate non-consensual, sexually explicit AI images of real people using ordinary photographs without their permission.

California Cites Deepfake Laws in Enforcement Action

According to the City Attorney’s Office, the action relies on two California laws designed to address the misuse of artificial intelligence for creating intimate deepfake content.

One statute makes it a criminal offence to knowingly facilitate or recklessly assist in the creation of non-consensual intimate deepfakes. Another law, enacted in 2025, allows civil action against digital platforms that continue to host or distribute such applications after receiving formal notice, potentially exposing app stores to legal liability.

Officials argue that Apple and Google were previously informed about the presence of these applications but allegedly allowed them to remain available while continuing to process in-app purchases.

Chiu stated that beyond any financial benefit earned through platform commissions, the apps have the potential to cause significant emotional, psychological, and reputational harm to victims whose images are manipulated without consent.

Research Report Prompted Wider Scrutiny

The legal action follows reports published by the Tech Transparency Project, a nonprofit research organization that documented the availability of AI “nudify” applications on major app marketplaces.

A report released in January 2026 identified numerous apps capable of generating synthetic intimate images, while a follow-up investigation in April 2026 alleged that many of those applications remained available and continued generating revenue. The report also claimed that some apps carried age ratings that could make them accessible to younger users despite their intended functionality.

Apple and Google Respond

Following the legal notices, both companies confirmed they had taken action against some of the identified applications.

Google said it had suspended all five apps named in the notice from Google Play, citing violations of its policies governing sexually explicit content.

Apple stated that its App Store guidelines prohibit applications designed to create or distribute pornographic material. The company said it had removed three of the identified apps, terminated the associated developer accounts, and was continuing discussions with the developers of the remaining applications over alleged policy violations.

AI Deepfake Platforms Face Growing Legal Pressure

The latest enforcement effort forms part of a broader campaign by San Francisco authorities to combat the misuse of artificial intelligence for creating non-consensual intimate imagery.

City officials have previously pursued legal action against websites offering similar AI-based image-generation services. Researchers have also raised concerns that major online platforms may inadvertently contribute to the spread of such tools by allowing advertising or promotional content that directs users to them.

Meanwhile, debate continues at the federal level over stronger legal protections for victims of AI-generated intimate imagery. While proposed legislation such as the DEFIANCE Act seeks to expand victims’ ability to pursue civil claims, California’s existing laws provide broader mechanisms for holding online platforms accountable in certain circumstances.

Authorities have increasingly warned that the misuse of generative AI extends beyond synthetic imagery. According to federal law enforcement data, AI-enabled fraud contributed to hundreds of millions of dollars in financial losses during 2025, highlighting the growing challenge regulators face in addressing emerging forms of digital abuse.

Global insurance major Aviva has deployed advanced artificial intelligence systems across its claims processing network, successfully preventing an estimated £230 million (approximately $295 million) in fraudulent insurance claims over a 12-month period, according to company disclosures.

The AI-driven fraud detection framework marks a major shift in how insurers are combating increasingly sophisticated, technology-enabled fraud networks operating across the financial services sector.

Rise of AI-Driven Insurance Fraud Rings

Aviva reported a sharp evolution in fraud patterns, with criminal groups moving away from simple exaggerated claims toward highly organized, tech-enabled schemes.

Fraudsters are increasingly using generative AI tools to create fake accident evidence, manipulate invoices, and produce deepfake images and videos designed to support fraudulent insurance claims. In some cases, entirely synthetic identities and fabricated digital documentation are being used to simulate legitimate losses.

The company also highlighted the growing threat of “ghost brokering,” where criminals impersonate legitimate insurance sellers through fake websites or social media profiles, selling invalid policies and pocketing premiums.

AI-Powered Fraud Detection System

To counter these threats, Aviva has integrated a multi-layered AI screening system into its claims processing workflow. The system evaluates claims in real time using advanced analytics and risk-scoring models.

Key components include:

• Behavioral Analysis: Detects unusual language patterns, timing anomalies, and claim submission behavior linked to fraud networks.
• Digital Forensics: Scans uploaded images and documents for signs of manipulation, including metadata inconsistencies and AI-generated alterations.
• Network Mapping: Identifies hidden connections between claims using shared IP addresses, devices, or financial identifiers to expose coordinated fraud rings.

The system flags high-risk claims for human review while allowing legitimate claims to be processed quickly.

Preventing Large-Scale Financial Losses

According to Aviva, the AI system has significantly improved fraud detection efficiency and reduced financial exposure across motor, property, and liability insurance segments.

The technology operates as a real-time risk filter, intercepting suspicious claims before payouts are approved. Company investigators said the system enhances—not replaces—human oversight, with flagged cases routed to specialized fraud investigation teams for deeper analysis.

Industry Moving Toward AI-Based Fraud Prevention

Experts say Aviva’s deployment reflects a broader transformation in the global insurance and banking sectors, where companies are increasingly turning to AI to combat automated fraud schemes.

Traditional manual verification methods are proving insufficient against the scale and speed of modern synthetic fraud, prompting insurers to adopt automated, data-driven compliance systems.

Industry analysts predict that AI-powered fraud detection frameworks and cross-industry threat intelligence sharing will soon become standard practice across financial institutions worldwide.

Future of Insurance Security

As fraud tactics become more advanced, insurers are expected to rely heavily on predictive analytics, machine learning, and real-time identity verification tools to safeguard operations.

Experts believe the next phase of financial security will involve interconnected AI systems capable of identifying fraudulent identities across global databases, reducing the ability of organized crime networks to operate across borders.