CFTC Warns Public of Artificial Intelligence Scams Targeting Investors

Bits Logics Team . 28th Jan 2024

• CFTC Office of Customer Education and Outreach issued a customer advisory cautioning the public about the rising threat of AI scams.
• The advisory, titled “Customer Advisory: AI Won’t Turn Trading Bots into Money Machines,” aims to inform investors about deceptive practices.
• Investors are specifically cautioned against falling for claims of high or guaranteed returns, as these are highlighted as red flags of potential fraud.

In a recent development, the Commodity Futures Trading Commission’s (CFTC) Office of Customer Education and Outreach issued a customer advisory cautioning the public about the rising threat of Artificial Intelligence (AI) scams. The advisory, titled “Customer Advisory: AI Won’t Turn Trading Bots into Money Machines,” aims to inform investors about deceptive practices wherein fraudsters exploit the potential of AI technology to defraud individuals.

According to the advisory, scammers are leveraging the increasing prevalence of AI in daily life to make false claims about generating significant returns through trading bots, trade signal algorithms, crypto-asset arbitrage algorithms, and other AI-assisted technologies. The ubiquity of social media platforms and the influence of online “influencers” are identified as factors that facilitate the spread of misleading information.

Investors are specifically cautioned against falling for claims of high or guaranteed returns, as these are highlighted as red flags of potential fraud. The advisory emphasizes that individuals promoting such claims online, especially strangers, should be approached with skepticism.

OCEO Director Melanie Devoe expressed concern about the misuse of AI, stating, “When it comes to AI, this advisory is telling investors, ‘Be wary of the hype.’ Unfortunately, AI has become another avenue for bad actors to defraud unsuspecting investors.”

The advisory serves as a guide for investors to identify and avoid potential scams, reinforcing the message that AI technology cannot accurately predict the future. Additionally, it provides four key considerations for investors, including the importance of researching the background of a company or trader before entrusting their funds to trading bots or trade-signal providers.

As technology continues to play a significant role in financial markets, the CFTC’s advisory underscores the importance of vigilance among investors and encourages due diligence to protect against fraudulent activities in the evolving landscape of AI-driven financial services.