One of your Product Manager’s generates an AI-faked and “funny” image of your competitor for use at your Sales Kick Off (SKO). After SKO, a pic of the image makes its way to a shared prospect, who your field person sees as a “friend”. Your competitor happens upon the image because that prospect is friends with everybody. Ouch! 

Legal exposure from AI-generated images turns on realism, source, and use, not whether labeled “meme” or “deepfake”. An image defensible as satire on social media may constitute deception when presented to prospects, as commercial use can negate traditional legal defenses. Let’s break down this real AI Risk. 

A disparaging meme or deepfake sent to a prospect is not “edgy marketing.” It is typically viewed as intentional commercial deception, triggering claims of: 

• Defamation + unfair competition 

• Fraud and tortious interference 

• Personal liability for executives 

• Emergency injunctive relief and invasive discovery 

As Vincent Allen of Carstens Allen Gourley LLP explains, “From a legal-risk perspective, deepfakes collapse the distinction between satire and fraud when used in a sales context. Many companies underestimate how fast false advertising and defamation cases can move. A single AI-generated image shown to a prospect can trigger injunctive relief, expedited discovery, and personal exposure for executives before anyone has time to call it a joke. So, it’s important to understand the types of legal risks that may be involved in using an AI-generated image for sales purposes.”  

“These AI risks can have material consequences.” says Michael Bacus, Co-founder of Indemnify AI, Inc., the vanguard in pricing and benchmarking AI risk. “As seen on Bleederboard.AI, a deepfake nude image circulated among co-workers and subordinates resulted in $4M of non-economic damages for past and future harm.” 

How do CEOs and CFOs cover these damages? Today, it’s an unreserved bottom-line hit. That results from CEOs and CFOs having attested financial statements with unquantified AI risk.  

Images aren’t the only form of deepfakes with material consequences: 

• $25M in Corporate Fraud as scammers used AI-generated voices and images of CFO (on video conferencing) to coerce a finance employee to transfer funds. The chairperson stepped down.  

• $7M in FCC Fines for Political Consultants using robocalls impersonating Joe Biden’s voice.  

We’re just seeing the tip of the iceberg: 

Deloitte’s Center for Financial Services projects that generative AI could cause fraud losses of $40 billion in the U.S. by 2027, that’s up from $12.3 billion just four years earlier. 

A strategy is urgently needed to weather forthcoming AI financial risk hits. With big insurers abandoning AI coverage (1), Captives are increasingly in focus. Whether added to an existing Captive or starting anew, the first step with AI risk is to financially quantify how much you have.