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Synthetic fraud involves using fake or AI-generated identities, including fictitious employees and students to exploit financial institutions, government agencies, HR systems, and digital platforms.
In 2024, 1.2 million AI-generated “ghost students” applied to California community colleges, bots designed to exploit federal and state financial aid. They completed paperwork, passed ID checks, submitted assignments, and triggered disbursements.
After tuition is covered, any remaining Pell Grant and state aid funds are refunded, allowing scammers to pocket thousands per fake student. The bots stay active just long enough to qualify, then disappear.
At least $11.1 million in aid was stolen this way, with some colleges reporting 31 percent of applications were fake.
The fallout is serious: Bots give the false impression that classes are filled, blocking real students. Professors now have to open sessions by verifying that students are human. Schools lose funding when bots mass-drop.
Proposed stricter ID and funding verification measures, intended to safeguard financial aid, could unintentionally block enrollment itself—disproportionately affecting low-income and older learners, the very populations community colleges strive to serve.
This isn’t just fraud, it’s the AI-driven hijacking of public education. And colleges were just the test case.
AI Phantoms Stealing Jobs and Secrets
AI-generated “ghost employees” are infiltrating companies across tech, finance, and government. Using fake résumés, portfolios, and deepfake interviews, they get hired, often under multiple identities. The goal isn’t just collecting a paycheck; it’s gaining system access.
Once inside, they quietly steal intellectual property, client data, and classified government information. These hires often go undetected until work stalls, breaches occur, or audits raise alarms, long after the damage is done.
Low-level roles are the entry point. The risk: internal sabotage at scale across both corporate and federal systems.
Synthetic Takeover
AI isn’t just faking résumés — it’s overtaking the internet. In 2025, AI-driven bots generated over half of all web traffic, scraping content, spawning fake accounts, hijacking discussions, and automating everything from FOIA requests to legal filings. Even platforms like GitHub and Wikimedia are straining under the weight of synthetic activity. The internet isn’t broken — it’s been synthetically overrun.
Systemic Damage
This isn’t just an annoying glitch — it’s tearing holes in critical systems:
- Real students are blocked from courses filled by bots.
- Educators are burned out from fraud-detection duty.
- Colleges risk losing funding due to enrollment anomalies.
- Employers are hiring ghosts and leaking trade secrets.
- Taxpayers are funding a shadow economy they can’t even see.
Just the Beginning
We’re facing an AI ghost economy with a tsunami of synthetic identities draining real money, credentials, and data from trusted institutions unprepared for this scale of fraud.
To combat it, we need robust identity verification, advanced AI-driven fraud detection, cross-industry collaboration, and balanced policies that protect vulnerable populations while shutting down synthetic fraud. Only a coordinated approach can safeguard institutions and restore trust.
Artificial Intelligence and the Insider Threat
From the Center for Development of Security Excellence: “Despite its wealth of positive, productive uses, AI can also pose a threat to national security through misuse during cyberattacks, disinformation campaigns, and the manipulation of critical infrastructure/systems. AI can be used by malicious actors to cause significant damage and disruption to national security and the organizations that defend it.”
How Scammers Are Using AI To Steal College Financial Aid
The author writes, “The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. Fake college enrollments have been surging as crime rings deploy ‘ghost students’ — chatbots that join online classrooms and stay just long enough to collect a financial aid check.”
Ghost Students Are Creating An ‘Agonizing’ Problem for Calif. Colleges
From SFGate: “‘Ghost students’ are artificially intelligent agents or bots that pose as real students in order to steal millions of dollars of financial aid that could otherwise go to actual humans. And as colleges grapple with the problem, [faculty] have been tasked with a new and ‘frustrating’ task of weeding out these bots and trying to decide who’s a real person.”
Students Applying for Financial Aid Will Face Stricter ID Verification
The author writes, “The Education Department [in June] announced new measures to verify the identities of people applying for financial aid — a move it says is needed because of rising fraud but is being met with mixed reactions from the higher education community.”
Deepfakes and Impostors: The Brave New World of AI Jobseeking
From The Week: “More than 80% of large companies use AI in their hiring process, but increasingly job candidates are getting in on the act.”