Emojis, TikToks, Finfluencers, Memes: All Will be Regulated
Nothing and no one is safe from regulatory oversight these days. So, if you’re promoting a product on social media, here’s a string of things to keep in mind.
In their new report “Financial promotions on social media”, the UK watchdog Financial Conduct Authority (FCA) fleshes out the rules for promoting financial services on different platforms.
The rules primarily revolve around compliant and non-compliant financial promotions, with the non-compliant ones defined as “one that has been lawfully communicated or approved by an authorised person but breaches our financial promotion rules.”
The agency notes that the UK social media advertising market was worth £6.4 billion in 2021, representing nearly a third of all internet advertising spend. It adds that 58% of those under 40 who have invested in high-risk investment products say hype on social media and the news lies behind their investment decisions.
This includes popular social media platforms like Twitter, Facebook, TikTok, etc.
According to the rules, financial services must do their best to provide detailed information. So, instead of posting a clickbait line such as “How can 1 pound grow to 250,000 pounds”, the services must use dryer language while providing more factual information.
An example is the two fake ads below, with the one on the left failing to meet the requirements as it needs to inform the reader fully about the potential risks.
Non-compliant (left) and compliant (right) ads. Source: Financial promotions on social media report
Likewise, a TikTok where a guy on the phone says that he wrote off $15K for a client, offering you to get in touch to receive a service like that, is non-compliant, according to the watchdog’s rules.
Non-compliant financial ad. Source: Financial promotions on social media report
And then there are memes. They, too, are subject to regulation. So, if you want to make a meme like the one below where you throw your cash at crypto, rest assured that you will be held accountable.
Furthermore, if you’re an investor and lose your money this way, you won’t get any compensation. The Financial Services Compensation Scheme (FSCS) doesn’t protect this type of investment because it’s not a ‘specified investment’ under the UK regulatory regime.
Non-compliant financial ad. Source: Financial promotions on social media report
Financial influencers or finfluencers are not exempt either. The agency noted that “we have observed the rise of ‘finfluencers’ with 62% of 18- to 29- year-olds following social media influencers and 74% saying they trust their advice. As a result, 9 in 10 young followers have been encouraged to change their financial behaviour.”
They are required to mark sponsored content and play by the book. If not, they’ll end up violating the law.
This is not financial advice – or?
The latest report reiterates the growing interference of different authorities social media.
In February, a U.S. federal court judge ruled that a number of emojis, such as a rocket flying in the air, are not just a means of visual appeal. They are also a form of investment advice. The case focuses on the lawsuit against Dapper Labs’ NBA Top Shot non-fungible tokens (NFTs) filed in 2021 and their chief product, Moments. They were advertised on social media, using rockets flying in the air.
This trend seems to be equally applicable to non-crypto domains. A Canadian court recently examined the sell-buy case in Court of King’s Bench, Saskatchewan.
Two parties interacted via text, during which the buyer sent a thumbs-up emoji to confirm the contract put out by the seller. The latter, however, never delivered the product, which prompted the buyer to take him to court. The judge ruled that the emoji served as an agreement to the contract, adding that while an emoji is a non-traditional means to "sign" a document, it was valid.
The farmer had to pay C$82,000 ($61,442) for an unfulfilled contract.
Previously, GNCrypto reported about UK crypto regulation being signed into law.
