California uses AI to find 80,000 fraud community college students. But they cost the state $90 million already last year.

Photo above - screen shot from the 2006 film "Accepted". The plot involves a fake college scam, but this year AI flipped the script and began creating fake students.

I did not see this coming. How do you steal $90 million in college aid by spoofing your application? Evidently there are two problems here.

First, the fraudsters used fake or stolen identities to apply to college online. Then the state of California approved their request for financial assistance, and disbursed money. The fraudsters took the money and ran. ... the state gave them the money – checks or electronic transfers – before classes even started. (See link below)

Before we pin a “software innovation of the year” on AI for detecting the fraud, let’s also note that AI was used by the perps to generate those stolen IDs, bank accounts, and steal the money. Evidently fraud applications tripled in 2024 because AI was having its moment in the news.

You’d think that if the number of college applicants exploded, someone in state government would take a closer look and say “WTH? Is this real?” Apparently, this never happened. California bureaucrats kept pushing money out the door, and crowing with pride about the boom in new students.

Okay, great that someone finally caught on, and used AI to slam the college door shut (at least partially). But here’s where it gets even trickier:

If there were 80,000 college fraud/AI student aid requests last year, then how many fraudulent applications were there in California for welfare, food stamps, section 8 housing, utility bill relief, etc? It’s probably even easier to steal identities for welfare fraud, isn’t it? And the IRS has been warning everyone – for years – that scammers are filing change of address and bank account info to steal our income tax refunds.

Welcome to AI, which is going to destroy us even before it becomes “sentient”.

I’m just sayin’ . . .

AI tracked down nearly 80,000 ‘ghost students’ trying to enroll in California colleges

beckyromero · 36-40, F

One of the dangers of electronic checks and online banking institutions.

It used to be you had to go into a bank to open an account and present your documents, deposit paper checks and have your signature checked when making a withdrawl.

Yes, people could still create fake identities. But it was much more difficult and the chance of getting caught was much higher.

But the banking industry doesn't care. Because they generally aren't the ones who end being scammed out of money. And they save money without having tellers and physical locations.