OSC research finds AI-enhanced scams pose significant risk to investors

TORONTO – The Ontario Securities Commission (OSC) today released Artificial Intelligence and Retail Investing: Scams and Effective Countermeasures that found AI-enhanced scams pose significantly more risk to investors compared to conventional scams.

AI can be used to rapidly spread common investment fraud and make deepfakes and voice cloning investment schemes possible. An online investing simulation that tested investors’ susceptibility to fraudulent investments found that participants invested 22% more in AI-enhanced scams than in conventional scams.

The experiment also examined strategies that protect investors from AI-enabled fraud. Both the “inoculation” technique, which involves prior exposure to scams and increasing investor awareness, and a simulated web browser plug-in that flags potential scams, were found to effectively reduce the participants’ susceptibility. The inoculation technique reduced investment in fraudulent opportunities by 10%, while the web-browser plug-in reduced investment by 31%.

“While AI can be utilized in ways that benefit investors, it becomes highly concerning when fraudsters use it to deceive investors,” said Leslie Byberg, Executive Vice President, Strategic Regulation at the OSC. “Finding promising ways to combat these heightened risks improves investor protection and increases Ontarians’ confidence in our capital markets."

This research builds on OSC’s recently released report Artificial Intelligence and Retail Investing: Use Cases and Experimental Research and reinforces the benefit of using behavioural science as a policy tool by regulators. As AI use in scams continues to increase, the OSC will undertake more research to help equip investors and market participants to spot the risks and protect themselves.

The OSC partnered with the Behavioural Insights Team (BIT) to conduct this research.

For more information about investing, investor protection and behavioural science, visit GetSmarterAboutMoney.ca and sign up for the OSC’s popular e-newsletter, Investor News. In addition, OSC in the Community hosts events online and across Ontario to talk with people about investor education and protection.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at http://www.osc.ca.

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