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Department of Insurance, Securities and Banking
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The DC Department of Insurance, Securities and Banking (DISB) urges District residents to exercise caution in light of the increase of investment frauds involving the use of artificial intelligence (AI) and other emerging technologies. Bad actors are using the growing popularity and complexity of AI to lure victims into scams.
Unregistered/Unlicensed Investment Platforms Claiming to Use AI
Federal, state and DC securities laws generally require securities firms, professionals, exchanges and other investment platforms to be registered. A promoter’s lack of registration status is an immediate red flag. Investors can use the Investor.gov website to confirm the registration status of investment professionals and check for disciplinary history.
Investing in Companies Involved in AI Technology
Bad actors often use the hype around new technological developments to lure investors into schemes. Be wary of claims that AI can guarantee amazing investment returns. Claims of high, guaranteed investment returns with little or no risk are classic warning signs of fraud.
AI-Enabled Technology Used to Create Fake Video, Audio and Website
Fraudsters can use AI technology to clone voices, alter images and even create fake videos to spread false investment information. AI technology might be used to impersonate a family member or friend, imitate the CEO of a company announcing false news, or produce realistic looking websites or marketing materials to promote fake investments. We regularly see scammers impersonating U.S. Securities and Exchange Commission (SEC) staff and other government officials. It is never a good idea to make an investment decision just because someone famous recommends a product or service.
Do Not Rely Solely on AI-Generated Information in Making Investment Decisions
Be cautious about using AI-generated information to make investment decisions. AI-generated information might rely on data that is inaccurate, incomplete or misleading. It could be based on false or outdated information about financial, political or other events, or it could draw from false or misleading information that was disseminated to try to manipulate a stock’s price. Even when based on accurate input, information generated by AI can be false or completely made up.
Protect Yourself
- When trading securities or seeking investment advice, work with a registered investment professional and on a registered exchange.
- Investors should carefully review the disclosures that companies make about AI and evaluate their promotional materials.
- Verify that the communication is genuine before taking action. Be wary of unsolicited communication asking you to invest money.
- Confirm the authenticity of underlying sources and review multiple sources of information before making investment decisions.
Report Fraud
If you believe you have been the victim of AI fraud, you may contact the DISB Enforcement and Consumer Protection Division at (202) 727-8000 or request assistance here. You may also file a complaint with the SEC at sec.gov/oiea/Complaint.html.
DISB Mission
Our mission is three-fold: (1) cultivate a regulatory environment that protects consumers and attracts and retains financial services firms to the District; (2) empower and educate residents and (3) support the development and expansion of business.
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