Experts warn AI money managers can mislead consumers

The Securities and Exchange Commission settled charges against Delphia (USA) Inc. and Global Predictions, Inc. for false and misleading statements about their use of artificial intelligence, imposing civil penalties of $225,000 and $175,000, respectively. Regulators called it the agency’s first AI-washing enforcement action, a signal that claims about automated money management are already drawing scrutiny.

That warning matters because AI can be useful in narrow, low-stakes tasks. CBS News business analyst Jill Schlesinger has pointed to budgeting as a place where software can help people organize spending and spot patterns. The line gets much riskier when a system is presented as if it can replace judgment about investing, taxes, retirement timing or how much risk a household can afford to take.

The SEC pressed that point again on March 27, 2024, when it adopted reforms relating to investment advisers operating exclusively through the internet. Those changes put online advice and automated models under closer watch at the same time advisers are selling faster, cheaper and more scalable digital services to retail customers. For consumers, the practical test is simple: if a platform says it is using AI to manage money, the promise should be checked against the firm’s actual obligations, disclosure language and oversight.

FINRA delivered a similar message in Regulatory Notice 24-09 on June 27, 2024, reminding member firms that existing FINRA rules and securities laws apply to generative AI, large language models and other AI tools. FINRA’s investor education materials also warn that AI can be used in investment fraud and misleading claims, which means the technology is not just a back-office efficiency tool but also a new way to package old scams.

Trust remains the central issue. A 2024 FINRA Foundation report examined whether consumers trust a financial professional or artificial intelligence more, underscoring that many people still want a human accountable when real money is on the line. AI may help with budgeting and pattern spotting, but when advice turns into a promise, consumers face a familiar risk: if the algorithm is wrong, the damage lands in the account, not the marketing deck.