The European Consumer Organization (BEUC), Europe’s top Consumer rights group, has raised concerns about the prevalence of misleading information and inadequate risk disclosure surrounding cryptocurrency ads on social media platforms.
TikTok, Instagram, Twitter & YouTube are responsible for allowing misleading advertisements of crypto to multiply through ads & influencers. This is an unfair commercial practice, exposing consumers to serious harm (loss of significant amounts of money): https://t.co/b6NYsBl4VM pic.twitter.com/xtwmTskezs
— The Consumer Voice (@beuc) June 8, 2023
In their report titled “Hype or Harm?” released on June 8, 2023, the organization stated that consumers are not adequately informed about the risks involved in cryptocurrencies when advertised on platforms such as Instagram, YouTube, Twitter, and TikTok. Facebook, in particular, was mentioned for promoting unlicensed financial platforms and cryptocurrency ads, despite rules that ban the act.
The organization also raised concerns about influencer endorsements of financial products. It described them as “unethical business practices” that expose consumers to significant risks, including potential financial losses. It singled out the role of “finfluencers” (financial influencers) in promoting cryptocurrencies and noted that they are particularly influential among younger audiences.
The BEUC noted that though many national authorities in the region have made efforts to address these issues, a comprehensive solution is still lacking. In the report, the organization highlighted the Unfair Commercial Practices Directive as a legal framework that can be implemented at the European Union level. It suggested that the Consumer Protection Cooperation Network (CPCN) should adopt a coordinated approach based on this Directive to address the promotion of cryptocurrency assets and related services on various platforms.
The organization also urged social media companies to implement stricter rules in their advertising policies, including a ban on influencers promoting cryptocurrency products.
In another development, the UK’s Financial Conduct Authority (FCA) and Advertising Standards Authority (ASA) issued a joint statement warning “finfluencers” about promoting dubious investment schemes on social media. The authorities particularly emphasized the need for caution when endorsing cryptocurrencies and non-fungible tokens (NFTs). They also provided a comprehensive seven-point checklist to help the affected parties comply with the legal obligations.
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