UK FCA Warns Finfluencers To Stop Promoting Illegal “Get Rich Quick” Schemes
- The FCA and ASA have collaborated with Sharon Gaffka to educate finfluencers on the dangers associated with pushing financial goods.
- They said that influencers should not imply that investing in cryptoassets is simple.
- They will also interact with influencers and their agents, giving them with clear information about potentially illicit financial promotions.
The Financial Conduct Authority (FCA) has joined forces with the Advertising Standards Authority (ASA) and Sharon Gaffka, a social media influencer who was previously on Love Island, to help educate financial influencers about the risks of promoting “get-rich-quick schemes” such as crypto and non-fungible tokens (NFTs) to their followers.
In their April 6 statement, the FCA and the ASA stated that they would be in contact with finfluencers and their agents to clarify what information could be considered an illegal financial promotion. They also laid out a seven-part checklist to ensure that finfluencers stay within the bounds of the law.
Financial influencers, or “finfluencers,” should not assume their followers completely grasp what they are pushing, according to authorities.
Sarah Pritchard, the FCA’s executive director of markets, stated:
“We’ve seen more cases of influencers touting products that they shouldn’t be. They are often doing this without knowledge of the rules and without understanding of the harm they could cause to their followers.”
The checklist urges finfluencers to assess if they are the “appropriate person” to promote the financial product and warns that their followers may “lose all their money” from the investment.
They are also warning influencers that, with investment scams on the increase, there is a danger that they would unknowingly introduce their followers to criminals.
It contains a warning that the ASA will take action if the laws governing the promotion of cryptocurrencies and NFTs are breached and that their followers may lose all of their money if they invest in crypto.
If implemented, the proposed rule will add crypto assets to a list of forbidden things, such as gambling and medicines, that cannot be marketed by influencers.
The FCA cautioned in 2019 that fraudsters often use social media for advertising their get-rich-quick trading platforms after revealing that victims of an investment scam involving cryptocurrencies and foreign currency trading lost an average of £14,600.
The campaign comes on the heels of the FCA’s annual financial promotions report, which indicated that the regulator’s action resulted in 8,582 promotions being changed or withdrawn during 2022.
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