All Steve Beauchamp wanted was money for his family. And he thought Elon Musk could help. Beauchamp, an 82-year-old retiree, saw a video late last year of Musk endorsing a radical investment opportunity that promised rapid returns.

He contacted the company behind the pitch and opened an account for US$248. Through a series of transactions over several weeks, Beauchamp drained his retirement account, ultimately investing more than US$690,000. Then the money vanished - lost to digital scammers on the forefront of a new criminal enterprise powered by artificial intelligence.

The scammers had edited a genuine interview with Musk, replacing his voice with a replica using AI tools. The AI was sophisticated enough that it could alter minute mouth movements to match the new script they had written for the digital fake. To a casual viewer, the manipulation might have been imperceptible.

“I mean, the picture of him - it was him,” Beauchamp said about the video he saw of Musk. “Now, whether it was AI making him say the things that he was saying, I really don’t know. But as far as the picture, if somebody had said, ‘Pick him out of a lineup’, that’s him.”

Thousands of these AI-driven videos, known as deepfakes, have flooded the internet in recent months, featuring phony versions of Musk deceiving scores of would-be investors. AI-powered deepfakes are expected to contribute to billions of dollars in fraud losses each year, according to estimates from Deloitte.

The videos cost just a few dollars to produce and can be made in minutes. They are promoted on social media, including in paid ads on Facebook, magnifying their reach.

“It’s probably the biggest deepfake-driven scam ever,” said Francesco Cavalli, the co-founder and chief of threat intelligence at Sensity, a company that monitors and detects deepfakes.

The videos are often eerily lifelike, capturing Musk’s iconic stilted cadence and South African accent.

Scammers will often start with a genuine video. Musk’s mouth movements are then edited with lip-syncing technology, which tweaks how someone speaks. Scammers will add an AI voice using voice-cloning tools, which copies any voice from sample clips.

The final ad, which can include fake graphics mimicking news organizations, can be quite convincing for casual internet users.

Musk has been by far the most common spokesperson in the deepfake scam videos, according to Sensity, which analyzed more than 2,000 clips. Musk was featured in nearly a quarter of all deepfake scams since late last year, Sensity found. He was featured in nearly 90% of the videos focused on cryptocurrencies.

Musk did not respond to requests for comment.

Deepfake ads have also featured Warren Buffett, the prominent investor, and Jeff Bezos, the founder of Amazon, among others.

It is difficult to quantify exactly how many deepfakes are floating online, but a search of Facebook’s ad library for commonly used language that advertised the scams uncovered hundreds of thousands of ads, many of which included the deepfake videos. Although Facebook has already taken down many of them for violating its policies and disabled some of the accounts that were responsible, other videos remained online, and more seemed to appear each day.

YouTube has also been flooded with the fakes, often using a label that suggests the video is “live.” In fact, the videos are prerecorded deepfakes.

After former US President Donald Trump spoke at a recent bitcoin conference, YouTube hosted dozens of videos using the “live” label that showed a prerecorded deepfake version of Musk saying he would personally double any cryptocurrency sent to his account. Some of the videos had hundreds of thousands of viewers, though YouTube said scammers can use bots to artificially inflate the number.

One Texan said he lost US$36,000 worth of bitcoin after seeing an “impersonation” of Musk speaking on a so-called live YouTube video in February 2023, according to a report with the Better Business Bureau, the nonprofit consumer advocacy group.

“I send my bitcoin, and never got anything back,” the person wrote.

YouTube said in a statement that it had removed more than 15.7 million channels and more than 8.2 million videos for violating its guidelines from January to March of this year, with most of those violating its policies against spam.

The prevalence of the phony ads prompted Andrew Forrest, an Australian billionaire whose videos were also used to create deepfake ads on Facebook, to file a lawsuit against Meta, its parent company, for negligence in how its ad business is run. He claimed that Facebook’s advertising business lured “innocent users into bad investments.”

Meta, which owns Facebook, said the company was training automated detection systems to catch fraud on its platform but also described a cat-and-mouse game where well-funded scammers constantly shifted their tactics to evade detection.

YouTube pointed to its policies prohibiting scams and manipulated videos. The company in March made it a requirement that creators disclose when they use AI to create realistic content.

The internet is now rife with similar reports from people scammed out of thousands of dollars, some of them losing their life savings. Hong Kong’s Securities and Futures Commission issued a warning in May about scams featuring Musk. Earlier this year, the Federal Trade Commission and the FBI warned Americans that AI-powered cybercrime and deepfake scams were on the rise.

“Criminals are leveraging AI as a force multiplier” in ways that make “cyberattacks and other criminal activity more effective and harder to detect,” the FBI said in an emailed statement.

Digital scams are as old as the Internet itself. But the new-wave deepfakes featuring Musk emerged last year after sophisticated AI tools were released to the public, allowing anyone to clone celebrity voices or manipulate videos with eerie accuracy. Pornographers, meme-makers and, increasingly, scammers took notice.

“It’s shifting now because organised crime has figured out, ‘We can make money at this’,” according to Lou Steinberg, the founder of CTM Insights, a cybersecurity research lab. “So we’re going to see more and more of these fake attempts to separate you from your money.”

The AI-generated videos are hardly perfect. Musk can sound robotic in some videos, and his mouth does not always line up with his words. But they appear convincing enough for some targets of the scam - and are improving all the time, experts said.

Such videos cost as little as US$10 to create, according to Cavalli from Sensity. The scammers - based mostly in India, Russia, China and Eastern Europe - cobble together the fake videos using a mix of free and cheap tools in less than 10 minutes.

“It works,” Cavalli said. “So they’ll keep amplifying the campaign, across countries, translating into multiple languages, and continuously spreading the scam to even more targets.”

Some of the scams often advertise phony AI-powered software, with claims that they can produce incredible returns on an investment. Targets are encouraged to send a small sum at first - about US$250 - and are slowly lured into investing more as scammers claim that the initial investment is increasing in value.

Experts who have studied crypto communities said Musk’s unique global fan base of conservatives, anti-establishment types and crypto enthusiasts are often drawn to alternative paths for earning their fortunes - making them perfect targets for the scams. In one video, taken from a shareholder meeting at Tesla, the deepfake Musk explains a product for automated trading powered by AI that can double a given investment each day.

“There’s definitely a group of people who believe that the secret to wealth is being hidden from them,” said Molly White, a researcher who has studied crypto communities. They think that “if they can find the secret to it, then that’s all they need.”

Scammers often target older Internet users who may be familiar with cryptocurrency, AI or Musk but unfamiliar with the safest ways to invest.

“The elderly have always been a very scammable, profitable population,” said Finn Brunton, a professor of science and technology studies at the University of California, Davis, who is an expert in the crypto market. He added that the elderly had been targets of fraud long before platforms like Facebook made them easier to scam.

Beauchamp, who is a widower and worked until he was 75 as a sales representative at a company in Canada, came across an ad shortly after joining Facebook in 2023. Although he remembers seeing the video live on CNN, a spokesperson for CNN said Musk had not appeared for an interview in years. (The New York Times could not identify a video matching Beauchamp’s description, but he said his story was nearly identical to that of another woman scammed online by a deepfaked Musk.)

He sent US$27,216 last December to a company calling itself Magna-FX, according to emails between Beauchamp and the company that were shared with the Times. Magna-FX made it seem like his investment was increasing in value. At one point, a sales agent used software to take control of Beauchamp’s computer, moving funds around to apparently invest them.

To withdraw the money, Beauchamp was told to pay a US$3,500 administration fee and another US$3,500 commission fee. He sent the money only to be told that he needed to pay US$20,000 to release a portion of the funds - about US$200,000. He paid that, too.

Although Beauchamp told the scammers that he had exhausted his retirement savings, maxed out his credit cards, tapped a line of credit and borrowed money from his sister to invest and pay the fees, the scammers wanted more. They asked him to pay yet another fee. Beauchamp contacted police.

Most traces of Magna-FX were taken offline, including the company website, phone number and email addresses used by the agents Beauchamp spoke with. Another company bearing a nearly identical name and advertising similar services did not respond to requests for comment.

“I guess now is the time to call me dumb, stupid, idiot and what other superlatives you can think of,” Beauchamp wrote in a report filed to the Better Business Bureau.

Beauchamp said he was managing to pay his bills using a smaller retirement account that he had not shared with the scammers, along with his pensions. He had planned to travel the world during his retirement.

Beauchamp filed a report with the local police, but little movement has been made on the case, he said.

“Because of the amount of fraud that is going on everywhere, my case got put in a queue,” he said. “I’m not getting my hopes up.”

 - NY Times