On April 6, 2023, the UK’s Financial Conduct Authority (FCA) and Advertising Standards Authority (ASA) released a joint statement warning financial influencers, known as “finfluencers,” about promoting fraudulent investment schemes on social media.
Cryptocurrencies and non-fungible tokens were explicitly mentioned in the statement, and a seven-point checklist was provided to ensure compliance with the law.
We’ve partnered with @ASA_UK and @SharonNJGaffka to help educate social media #influencers about the risks involved in promoting #financial products. https://t.co/IwQkcc90a9
— Financial Conduct Authority (@TheFCA) April 6, 2023
The FCA, in conjunction with the ASA, created an infographic to help influencers make decisions when approached to promote a financial product. The infographic outlines the factors they must consider before accepting brand collaborations for financial products and services.
The regulators’ checklist cautions influencers about the potential loss of investment capital by their followers and challenges them to consider whether they fit the ideal profile to promote the financial product.
The statement advised that social media influencers should exercise due diligence and take extra precautions to ensure their advertisements comply with FCA regulations and ASA guidelines. This includes obtaining FCA approval and ensuring that the advertisement is truthful, accurate, and properly labelled as an advertisement.
Additionally, influencers are advised to consult ScamSmart, a checklist provided by the FCA and ACA, to avoid endorsing investment fraud. The checklist slogan states, “If in doubt, don’t promote.
The FCA and ASA plan to engage in an open dialogue with influencers and their representatives regarding potential financial promotions that may violate the law. They also intend to organize a roundtable discussion on fraudulent financial promotions, inviting influencer marketers and agents to participate.
Both the FCA and ASA have become increasingly concerned about the potential harm to followers due to influencers abusing social media.
The FCA’s executive director, Sarah Pritchard, stated a growing trend of influencers endorsing products they shouldn’t, often without realizing the legal implications or the potential harm to their followers.
To prevent consumers from being exposed to fraudulent or unsafe investments, the FCA seeks to partner with influencers and provide them with the necessary guidance to stay compliant with the law.
Sharon Gaffka, a former Love Island contestant from the UK, has partnered with the FCA and ASA to raise awareness of the risks associated with lucrative marketing schemes.
Meanwhile, in France, the National Assembly’s economic committee approved an amendment proposal on March 23, 2023, prohibiting French social media influencers from promoting cryptocurrencies and NFTs from unregistered businesses.
Several high-profile individuals, such as Kim Kardashian, Floyd Mayweather, and Jake Paul, have faced lawsuits or penalties for endorsing cryptocurrency investment schemes without full disclosure.
In October 2022, Kim Kardashian, a well-known reality TV star, agreed to pay $1.26 million to settle allegations that she promoted a cryptocurrency on Instagram without disclosing that she received $250,000 for the endorsement.
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