False information. Misuse of funds. Unnecessary risk.
Hiring a due diligence firm that prioritizes artificial intelligence tools over experienced human researchers may result in misleading and incomplete due diligence reports – at a significant risk to your business. Thorough due diligence still requires a personal touch that addresses the blind spots inherent in large language model AI tools, which can otherwise miss important red flags visible only to a competent human investigator.
Case in point
A client recently hired Gryphon to conduct due diligence on an e-commerce company that disclosed being involved in a federal civil lawsuit. The subject had told the client that it had simply been seeking damages for undisclosed liabilities stemming from its acquisition of a separate e-commerce company. A surface-level investigation would have found that the subject company was properly registered, that it had not been the target of any regulatory proceedings, and that it had received dozens of five-star customer reviews on mainstream corporate rating websites. An automated approach to due diligence relying on AI tools may have stopped there—with the client receiving a report giving the impression of a well-respected company with a nominal litigation profile.
Such an impression would have been highly misleading.
AI results should be fully vetted by an experienced human researcher – like those at Gryphon.
The big picture
Gryphon’s experienced investigators recognized the e-commerce company’s business model as similar to known varieties of get-rich-quick scams. Evaluating the company’s online presence through this lens raised several red flags that would have otherwise been missed:
- First, Gryphon identified the dozens of glowing customer reviews as highly suspect, given that they are routinely faked by get-rich-quick scams, even on normally reputable rating sites.
- Research into the subject’s disclosed commercial lawsuit found that the acquired e-commerce company and its former owners were subsequently targeted by a Federal Trade Commission (FTC) lawsuit for scamming clients out of tens of millions of dollars.
- While the subject of the report was not mentioned in the FTC suit, its principal ultimately co-signed a multi-million dollar injunction that liquidated the assets of the scam enterprise acquired by the subject.
The bottom line
As many due diligence companies continue to trend towards a greater reliance on AI, clients may be paying for reports that are incomplete or compromised by fake reviews, commissioned articles posing as independent news, and other online content optimized to fool AI. While AI can be helpful in building efficiencies into a research process, the results it produces should be fully vetted by an experienced human researcher – like those at Gryphon.
Gryphon’s experienced team of knowledgeable investigators helps eliminate this risk by giving our clients the certainty that the information they are receiving is comprehensive and high quality. Gryphon is the trusted partner that provides the deep, actionable intelligence necessary to assess and appropriately size risk. To learn more, contact Gryphon at [email protected].
