Episode 396: Theresa Ebden - Protecting Investors at the OSC

What It Covers

Theresa Ebden from the Ontario Securities Commission explains how the OSC protects retail investors through education, research, and regulation. The conversation covers AI-enhanced scams, financial influencer impact, gamification in trading apps, and practical fraud prevention strategies. The OSC's GetSmarterAboutMoney.ca receives nearly 5 million annual visits providing free financial literacy resources in 23 languages.

Key Questions Answered

• •AI-Enhanced Fraud Detection: The OSC's takedown service deactivated 3,900 fake investment platforms and cryptocurrency scam websites between June and November 2023. AI enables fraudsters to create polished, grammatically correct scams at scale, removing traditional red flags like poor formatting. System-level mitigations like browser plugins and platform warnings can reduce scam investments by up to 31 percent, while pre-exposure education about AI scam tactics significantly reduces susceptibility through inoculation effects.
• •Financial Influencer Impact: Research shows 35 percent of respondents made financial decisions based on influencer advice, with 24 percent of those exposed to influencer-style posts buying promoted assets versus only 7 percent unexposed. Non-investors are 12.2 times more likely to have been scammed on social media and five times more likely to trade frequently. Those following influencer advice are three times less likely to work with registered financial advisors and twice as likely to have experienced significant investment losses.
• •Gamification Effects on Trading: Trading platforms using gamification techniques increase trading frequency, which correlates with lower returns, and create herding effects where investors gravitate toward promoted securities. However, positive gamification can increase portfolio diversification by 3.5 to 4.5 percent. Effective mitigations include requiring opt-in rather than automatic enrollment, displaying risk disclosures about gamification techniques, and implementing confirmation screens that create positive friction to encourage deliberation before trades.
• •Relationship Investment Scams: Long-haul scams involve fraudsters building trust over extended periods before introducing investment opportunities, often starting with small amounts like one hundred dollars. These operations use sophisticated dashboards managing 20 to 30 simultaneous conversations, with AI translators and specialized teams handling different stages from initial contact through voice communication to investment solicitation and recovery room schemes. Victims are particularly vulnerable due to loneliness and isolation rather than greed.
• •Investor Contact Center Data: The OSC processes 10,000 cases annually through their contact center, with 75 percent from market participants and a significant portion fraud-related. Data flows directly into strategic priorities, with weekly manager meetings identifying trends. When recovery room scams increased, the center created example calls, developed educational materials, and coordinated policy responses like the trusted contact person initiative, demonstrating how frontline data drives regulatory action.
• •Verification Before Investing: Investors should use CheckBeforeYouInvest.ca to confirm registration status of advisors, independently verify investment legitimacy using trusted sources, and document all details in writing. Be suspicious of unsolicited offers, guaranteed returns outside GICs, exclusive AI opportunities, and highly emotional language creating urgency. Seek second opinions from registered professionals and trusted contacts, spending more time researching investments than choosing household appliances to reduce fraud vulnerability.