UK regulators warn influencers about the risks of promoting NFTs and cryptocurrencies | Social Media

Britain’s financial and advertising regulators have warned social media influencers about the risks of promoting “get-rich-quick schemes” such as cryptocurrencies and non-fungible tokens to their followers.

The Financial Conduct Authority and the Advertising Standards Authority have launched a campaign to prevent content creators from promoting investment scams and risky financial products.

The watchdogs have teamed up with former Love Island contestant Sharon Gaffka to ask financial influencers – or ‘finfluencers’ – and their agents to consult a checklist before accepting branding deals for financial products and services.

Sarah Pritchard, managing director of markets at the FCA, said: “We’ve seen several cases of influencers claiming products they shouldn’t be. They often do this without knowledge of the rules and without understanding the damage they can cause their followers.

“We want to work with influencers to stay on the right side of the law, as this will also help protect people from being exposed to scams or investments that are too risky.”

The checklist warns online personalities that making an illegal financial promotion is a criminal offense that carries a maximum penalty of two years in prison and an unlimited fine.

It also includes a reminder that the ASA will take action if the rules surrounding the promotion of cryptocurrencies and non-fungible tokens (NFTs) are broken, and that their followers could lose all their money if they invest in crypto.

The watchdogs said investment fraud is on the rise and influencers can “unwittingly introduce followers to criminals”.

Influencers must also mark their posts as advertisements if they receive any form of payment from the brand they work with.

Rio Stedford, a financial planning expert at wealth management firm Quilter, said: “People naturally have a fear of missing out and these schemes prey on that fear to get people in.

“But if that is the main reason for investing, people need to rethink their investment strategy.

“There needs to be a much greater understanding of what investment, trading and gambling are.”

Tom Selby, head of pensions policy at investment firm AJ Bell, said: “Too often social media looks more like the financial Wild West than a safe place to learn about sound financial planning.

“At worst, fin influencers can encourage followers to invest in scam schemes and end up losing everything.

“The fact that much of this activity occurs outside the regulated area is likely why the FCA is focusing on educating those who send out messages to their followers.”

The FCA warned in 2019 that fraudsters often use social media to promote their “get-rich-quick” trading platforms, when it revealed that victims of an investment scam involving cryptocurrency and foreign exchange trading lost £14,600 on average.