The Ontario Securities Commission (OSC) released a report revealing that AI-enhanced scams pose a greater risk to investors than traditional scams.
The report, titled “Artificial Intelligence and Retail Investing: Scams and Effective Countermeasures,” found that AI can rapidly spread investment fraud and enable schemes such as deepfakes and voice cloning, increasing the potential harm to unsuspecting investors.
An online simulation conducted as part of the report showed that participants invested 22 percent more in AI-enhanced scams than in conventional scams. The OSC’s research highlighted the growing threat of AI-powered scams in retail investing and tested strategies for protecting investors from these increasingly sophisticated fraudulent schemes.
The report tested two mitigation techniques: an “inoculation” strategy involving raising investor awareness by exposing them to scam tactics beforehand and a simulated web browser plug-in that flagged potential scams. The inoculation technique reduced investment in fraudulent opportunities by 10 percent, while the web browser plug-in proved more effective, reducing fraudulent investments by 31 percent.
“While AI can benefit investors, it becomes highly concerning when fraudsters use it to deceive,” said Leslie Byberg, executive vice president of strategic regulation at the OSC. “Finding ways to combat these risks is crucial for investor protection and maintaining trust in Ontario's capital markets.
This research builds on the OSC’s previous report “Artificial Intelligence and Retail Investing: Use Cases and Experimental Research.” It emphasizes the importance of using behavioural science as a tool for regulators to protect investors in an environment where AI-driven fraud continues to evolve.
The OSC partnered with the Behavioural Insights Team (BIT) to conduct this study as part of the OSC's efforts to address investor protection amid advancing AI technologies.
The report’s findings highlighted the need for continued research to develop both system-level and individual-level protections to help investors recognize and avoid AI-enhanced scams. The OSC encourages anyone who suspects fraudulent investment activity to report it through the Commission’s online complaint form.