Episode 396: Theresa Ebden - Protecting Investors at the OSC

Episode Summary

Executive Summary: Teresa Ebden of the OSC explained how Ontario’s investor office protects retail investors through policy, education, outreach, and complaint handling. The discussion focused on fraud prevention, AI-powered scams, finfluencers, dark patterns/gamification in apps, and practical tools investors can use to verify claims and reduce harm.

Main Topics: OSC mandate and investor office functions (Priority: 5/5): Teresa outlined the OSC’s role as Ontario’s securities regulator and the investor office’s work across policy, education, outreach, contact-center support, behavioral insights, and national/international coordination. Fraud, impersonation, and AI-enhanced scams (Priority: 5/5): The conversation explored how AI supercharges old scams through deepfakes, voice cloning, fake endorsements, phishing, and relationship-based fraud, and what investors should do when impersonation occurs. Finfluencers and online investment advice (Priority: 5/5): Teresa defined finfluencers, described their influence on investor behavior, and discussed the risks posed by unregistered or conflicted online personalities as well as the regulatory response. Gamification and dark patterns in investing apps (Priority: 4/5): The hosts and Teresa discussed how digital design features can nudge users toward more trading and risk-taking, often benefiting platforms more than investors, and how positive friction can help. Investor education and GetSmarterAboutMoney.ca (Priority: 4/5): The OSC’s educational ecosystem, especially getsmarteraboutmoney.ca, was highlighted as a neutral, high-quality resource for fraud prevention, investing basics, behavioral bias awareness, and financial literacy. Vulnerable investors and trusted contact protections (Priority: 4/5): Teresa described efforts to protect seniors and vulnerable investors, including the trusted contact person initiative and broader work on investor redress and complaint handling.

Key Arguments: The OSC’s investor office is designed to identify and reduce investor harm through a combined policy, education, and enforcement-adjacent approach. Investor issues are discovered through multiple channels: contact-center data, behavioral research, internal OSC teams, external advisory panels, and coordination with other regulators. AI does not create entirely new scams so much as it scales and improves the credibility of old ones, making fraud faster, more convincing, and harder to detect. Finfluencer content meaningfully affects investor decisions, especially among less experienced or non-investor audiences who may trust online personalities more than traditional financial professionals. Social-media advice can be persuasive because it feels simple, accessible, and emotionally engaging, but disclosures and registration checks are essential. Gamification in investing apps can increase trading frequency and herding behavior, which are linked to worse outcomes, though carefully designed features can also improve diversification and savings behavior. Investor protection requires both education and system-level safeguards such as warnings, platform friction, and better disclosure, not just 'buyer beware.' The OSC sees education as inoculation: teaching people the common tricks of scams and app design makes them less vulnerable before they encounter them.

Data Points: OSC annual contact-center volume: about 10,000 cases per year - Teresa described the investor office’s inquiries and contact center workload GetSmarterAboutMoney website visits: almost 5 million visits last year - Used to illustrate the scale of the OSC’s investor education reach Total OSC resource visits: 17 million visitors last year - Combined reach across website, social channels, and related resources Languages supported: 23 languages - Investor education content is offered in multiple languages to broaden access Observed effect of finfluencer exposure: 35% - Share of respondents reporting a financial decision based on advice from a finfluencer Experiment: post exposure vs control: 24% vs 7% - Those exposed to finfluencer-style posts bought the promoted asset at a much higher rate than those not exposed Investor exposure comparison: 21% of investors vs 29% of non-investors - Non-investors were more likely to buy the promoted asset when exposed to finance-related social media content Social-media scam vulnerability: 12.2 times more likely - People who made financial decisions based on influencer advice were more likely to have been scammed on social media Trust in finfluencers: 7.2 times more likely - Those influenced by finfluencer advice were more likely to trust the financial influencers they follow Frequent trading behavior: nearly 5 times more likely - Finfluencer-influenced respondents were more likely to trade stocks or other investments several times a week Perceived usefulness of finfluencers: nearly 4 times more likely - Influenced respondents were more likely to say finfluencers provide useful information Risk tolerance: 3 times more willing - Finfluencer-influenced investors were more willing to take moderate risks and accept some losses for higher returns Significant prior investment losses: 2 times as likely - Influenced respondents were more likely to have experienced major investment losses in the past Mobile self-service usage: 2 times as likely - Finfluencer-influenced respondents were more likely to manage investments through self-service mobile apps Advisor usage: 3 times less likely - Those influenced by finfluencers were less likely to work with a financial advisor or portfolio manager AI-enhanced scam susceptibility: 22% more invested - Participants invested more in AI-enhanced scams than in conventional scams in an OSC study Platform scam deactivation effort: 3,900+ sites - CSA takedown work deactivated nearly 4,000 fake investment and crypto scam websites between June 5 and Nov. 23 Gamification harm: increased trading frequency and herding - OSC research linked gamification to more trading and crowding into promoted securities Gamification benefit: 3.5% to 4.5% increase in diversification - Positive gamification techniques improved portfolio diversification in experiments Fraud reduction from platform warnings: up to 31% - Browser plug-ins or platform-level warnings materially reduced scam investing in experiments

Pivotal Quotes: "The thing I want to say is we have a fraudulent web removal service, like it's called the takedown service informally." — Teresa Ebden: Discussing a positive enforcement/mitigation effort against scam websites "Educating investors about everything in the financial literacy basket because we know that is what helped inoculate against fraud and help people have a better experience as investors." — Teresa Ebden: Explaining the purpose of OSC education and outreach "AI-enhanced scams take the traditional scam world and just magnify that." — Teresa Ebden: Describing why AI makes fraud more dangerous and scalable

Implications: Listeners should verify credentials, disclosures, and registrations before acting on online advice, use regulator-backed resources, and be extra skeptical of urgency or guarantees. The industry may face more scrutiny over app design and influencer marketing.