AI Investment Scams: How To Spot And Avoid Them

Scammers are now using artificial intelligence to lure unsuspecting people into putting their money into investment scams. Hundreds of thousands of dollars could be lost when people invest with these fraudulent groups and individuals.

This is a guide to AI investment scams with information on how to spot them and how to avoid losing money in them.

How AI Investment Scams Work

The California Department of Financial Protection and Innovation has issued a warning to consumers explaining the existence of these scams.

“One common type of investment fraud is where scammers use certain buzzworthy terms to entice investors to hand over their money,” the department explained. “The DFPI has recently noticed an increase in investment scams that claim to use AI to make money for investors. Usually, these types of investment frauds claim that their AI can trade crypto on behalf of investors and generate too-good-to-be-true profits.”

The department warns that as part of these scams, AI technology can be used to create deepfake videos of people that do not exist. They cite the example of a purported crypto investment featuring a YouTube video with an AI-generated “CEO.” “In reality, this was a hoax: the individual was not the company‚Äôs CEO, but rather a fictitious avatar programmed with AI to recite a script.”

Another possible technique is the use of AI to clone someone’s voice, then using that voice on a phone call to lure someone into a fraudulent investment opportunity.

How To Protect Against AI Investment Scams

The California Department of Financial Protection suggests several ways for consumers to protect themselves from AI investment scams.

  • Consumers should be cautious of investment platforms that say they use AI to generate financial returns for investors. In many cases these platforms exist to trick investors into giving away their money.
  • Be aware that many investment platforms claim that they trade crypto on behalf of investors, but in reality are complete scams that aren’t doing any real trading at all
  • Some AI investment scams are really Ponzi or pyramid schemes. In these setups, fake “profits” are paid out from one group of investors to the next, without any underlying profit actually being generated. The department explains that a so-called investment “opportunity” that asks people to recruit new investors can be a major “red flag.”