Online Investment Scams Pose Growing Threat, IOSCO Calls for Collaborative Action

In the face of a mounting menace to online investors, the International Organization of Securities Commissions (IOSCO) is raising the alarm and rallying for a united front to combat the escalating problem.

IOSCO, a global consortium of securities regulators, recently issued a stark warning regarding the mounting perils that investors encounter in the digital landscape. These dangers include misleading promotions, deceptive investment schemes, and the dissemination of misleading information through advertising and social media channels.

“While the patterns of misconduct may appear familiar, the ease of perpetrating online fraud and the boundless nature of the internet pose fresh and intensifying challenges. Emerging forms of fraud, notably involving crypto assets and technology, are on the upswing,” cautioned IOSCO.

The organization also pointed out that the increasing sophistication of artificial intelligence (AI) can exacerbate the scale and impact of detrimental online activities. However, it acknowledged that AI also holds promise as a powerful tool for regulators to identify, forestall, and disrupt fraudulent activities more effectively.

Even as IOSCO voiced support for the burgeoning participation of retail investors in online trading, citing its contributions to financial inclusion and market development, it simultaneously underscored the concurrent rise of “bad actors” employing intricate yet fraudulent tactics to exploit trust and vulnerabilities.

To safeguard investors, IOSCO issued a resounding call to action, urging investors to remain vigilant against online fraud and scams. They emphasized that regulators across the globe continue to be inundated with complaints about the illicit promotion and distribution of products and services online, resulting in substantial losses for retail investors worldwide.

Recognizing the intricacies of addressing online schemes, IOSCO recommended that regulators seek enhanced powers and broader jurisdiction to ensure investor protection within this increasingly complex digital realm.

In a bid to address these challenges, IOSCO implored law enforcement agencies, policymakers, social media platforms, and search engines to join hands in global endeavors to mitigate online harm. Through collaborative efforts, these stakeholders can create a more secure online environment for investors and effectively combat fraudulent activities.

Jean-Paul Servais, Chairman of IOSCO, highlighted the importance of using trustworthy sources of information, avoiding overinvestment in a single product, and investing only what one can afford to lose. These precautions can go a long way in mitigating the risks associated with online investments and shielding retail investors from falling victim to scams.

For more information on IOSCO's endeavors to safeguard online investors and combat online fraud, please visit our website.

IOSCO's Role in Protecting Online Investors

The International Organization of Securities Commissions (IOSCO) is a worldwide organization of securities regulators. Its principal objective is to protect the interests of investors while also ensuring the integrity and efficiency of financial markets. In the context of internet investment, IOSCO is critical in fighting for investor safety and tackling the rising concerns presented by online fraud and scams. The group advocates for coordinated efforts among regulators, law enforcement agencies, lawmakers, and digital platforms to address online abuse and offer a safer environment for investors. IOSCO also advises investors to take care, utilize credible sources of information, and avoid investing more than they can afford to lose while engaging in online investments.