Introduction
Artificial intelligence (AI) is transforming industries worldwide, from healthcare to finance, e-commerce, and beyond. However, while AI brings innovation and introduces powerful tools, it also increases the negative impacts of AI misuse by scammers. Fraudsters are now using generative AI to create deepfakes, clone voices, fake videos, and do phishing attacks that are almost indistinguishable from real human communication.
In 2025, the threat landscape is no longer just hackers vs firewalls — it’s AI vs AI. Criminals deploy AI to deceive, while businesses and cybersecurity providers deploy AI to detect and defend. This technological arms race affects everyone, particularly companies that manage online transactions, sensitive data, and customer trust.
And in this fight, Two-Factor Authentication (2FA) and SMS OTP services remain essential tools. They may not stop deepfake scams alone, but they provide the critical extra layer that can mean the difference between a blocked attack and a costly breach.
How Fraudsters Use AI for Attacks
Generative AI has opened new doors for cybercriminals. Let’s break down the main tactics:
Deepfakes for Impersonation – Fraudsters can create realistic fake videos or images of CEOs, government officials, or even family members. These are then used in “CEO fraud” or business email compromise (BEC) scams, tricking employees into approving transfers or sharing sensitive data.
Voice Cloning – AI-powered voice cloning enables attackers to mimic the voice of a trusted person during a phone call. Imagine receiving a call from what sounds like your CFO authorizing a payment. It’s alarmingly effective.
Synthetic Identities – Fraudsters blend real and fake personal data to build new “synthetic” digital identities. These identities bypass basic verification systems and are often used to open accounts, apply for loans, or run fraud campaigns.
AI-Powered Phishing – Instead of poorly written scam emails, fraudsters now use AI to write natural, error-free messages. These messages mimic corporate tone, even referencing current events or company-specific details scraped from the web.
The Scale of the Threat
In the US, the FBI’s Internet Crime Complaint Centre (IC3) reported billions in annual losses due to phishing, BEC, and identity fraud. Deepfake-related incidents are rapidly rising, with experts warning that voice and video fraud could become one of the most damaging cybercrime tactics in the next few years.
Globally, banks, fintech companies, and e-commerce platforms are already seeing how AI fraud scales faster than humans can detect. Without strong defences like 2FA authentication and AI-powered anomaly detection, businesses risk being outpaced.
How AI is Fighting Back
Thankfully, AI isn’t just helping attackers — it’s also revolutionising defence:
✅ Deepfake Detection Tools: Algorithms trained to spot subtle inconsistencies in videos, images, and voices.
✅ Behavioural Biometrics: Systems that monitor typing speed, mouse movement, and device interaction to detect if the “user” is real.
✅ Real-Time Anomaly Detection: AI models that flag unusual logins, payment attempts, or API calls.
✅ Adaptive Authentication: Adding or skipping security challenges based on the risk profile of each interaction.
When combined with proven solutions like SMS OTP services and 2FA authentication, these defences create a multi-layered approach to stopping fraud.
Why Two-Factor Authentication Still Matters
Some argue that SMS OTP services are outdated, but in reality, SMS OTPs remain one of the most widely adopted and user-friendly forms of two-factor authentication (2FA). For industries such as banking, healthcare, and e-commerce, SMS OTPs are often the first line of defence against account takeovers.
With an SMS OTP API, businesses can integrate one-time passwords seamlessly into login flows, payment authorizations, and account recovery.
By requiring users to confirm identity via SMS OTP service, even if fraudsters gain login credentials through phishing or AI scams, they still can’t access the account without the OTP.
For high-value transactions, using two-factor authentication is becoming a regulatory requirement in many regions, including the US and EU.
At myotp.app, we understand the balance businesses need: fast, reliable OTP delivery and strong fraud prevention. That’s why our SMS OTP API is designed for scalability, low-latency delivery, and global reach.
Real-World Example: AI Fraud Meets 2FA
Consider a US-based fintech company processing real-time payments. Fraudsters use AI-generated phishing emails to steal account logins. Without 2FA, attackers would quickly transfer funds. But because the platform integrated SMS OTP services, every transaction required a one-time code. The fraud attempt was flagged, blocked, and logged — saving the company both money and reputation.
This highlights why two-factor authentication (2FA) remains critical in the AI era: it introduces a human validation step that AI-driven fraud can’t easily bypass.
Preparing for the Future
Here are some practical steps businesses should take:
Adopt Adaptive MFA — Combine SMS OTP service with push notifications or biometrics for layered protection.
Invest in AI Fraud Detection — Utilise AI-powered systems to identify anomalies in login and payment transactions.
Secure Your APIs — Ensure your SMS OTP API is protected against abuse, with rate limits and monitoring.
Educate Teams & Customers — Train staff to recognize deepfakes and AI-driven phishing attempts.
Stay Compliant — Regulations like PCI DSS 4.0 and GDPR are increasingly mandating stronger authentication.
Conclusion
The fight against fraud has entered a new era: AI vs AI. Fraudsters are using generative tools to deceive, while businesses are deploying AI to defend. However, one truth remains clear — without two-factor authentication (2FA) and trusted SMS OTP services, companies leave the door wide open.
By combining the latest AI-powered security technologies with proven solutions, such as SMS OTP APIs, businesses can build a resilient defence against deepfake scams, payment fraud, and identity theft.
At Myotp.app, we help businesses protect what matters most — customer trust, secure payments, and data integrity. Whether you’re a startup or enterprise, our SMS OTP service gives you the reliability, scalability, and security to fight back in this AI-driven world.
