The North American Securities Administrators Association (NASAA) released its annual list of top threats to retail investors. The association – which represents state and provincial securities regulators in the US, Canada and Mexico – looked at data from the US and Canada specifically.

This year, the most critical threats include financial scams tied to digital assets and cryptocurrency, social media apps, and marketing tactics designed to play on emotions.

NASAA’s findings

The findings showed that NASAA members are spending the most time on:

• Investigations involving likely scams targeting investors through platforms such as Facebook and X (31.7%), and text- and voice-based communication platforms, such as Telegram and WhatsApp (31.3%). Scammers are also commonly using platforms for long-form video content such as YouTube and Vimeo (14.1%) and short-form video content like TikTok and Instagram Reels (19.0%) to reach victims.

• The use of artificial intelligence to harm investors is a big concern as well; securities regulators expect an uptick in 2025 of bad actors using AI to generate professional graphics, videos and content that create a sense of legitimacy (38.9%) and to use deepfake images, videos and voices of celebrities and persons known to the intended victims (22.2%).

• Schemes using digital platforms generally are concerning, as professional imagery and professional videos often advertise lucrative financial instruments marketed and sold by sellers who are often not registered or licensed by state regulators to deal in securities.

AI and exploitation

Regulators say criminals are already exploiting AI across multiple fronts. The bad actors are creating and selling AI-powered trading bots, selling equity in companies, purportedly developing an AI model, or perpetrating account takeover scams. 

AI is used in sophisticated and elaborate attacks such as identity fraud, using existing pictures of people online and app spoofing.

Many of these schemes are affinity frauds that may also be heavily tied to emotion. Perpetrators of relationship and romance scams contact victims – oftentimes seemingly at random – and develop relationships before soliciting ever larger investments. After draining the victim’s bank accounts, the promoter simply disappears with the money.

“State registration laws are critical to the protection of investors,” said NASAA Enforcement Section Committee Co-Chair Amanda Senn. “Registered parties must typically demonstrate their qualifications, satisfy background checks, and even open their books and records to periodic state inspection.”

Senn reminded investors to always investigate the registration status of the parties before purchasing investments, especially those promoted over the internet or in social media.

Indeed, this type of advice is wise for advisers to share with their clients too.