FCA warns… Beware plague of the celeb savings scams

High-profile: Reality star Kim Kardashian was fined £1m by US regulators

The City watchdog has sounded the alarm over the safety of ‘get-rich-quick’ savings and investments promoted by internet celebrities.

The Financial Conduct Authority (FCA) said a record 8,582 misleading promotions were blocked or amended last year – 14 times more than in 2021.

The regulator also published more than 1,800 alerts to prevent savers losing money to scams, which have sky-rocketed since the pandemic.

The interventions came amid growing concern over the number of social media personalities posting dodgy adverts for financial products.

It is feared these financial influencers – dubbed ‘fin-fluencers’ by the FCA – are convincing people to plough money into products that are unsuitable or highly risky. ‘Fin-fluencers have been a growing concern for the regulator,’ the FCA warned.

The watchdog said firms such as Facebook and Instagram owner Meta and YouTube parent company Alphabet will now be held to higher standards in preventing these illegal adverts. The move comes as a string of high-profile cases show the mounting fears about the involvement of social media personalities in finance. Reality star Kim Kardashian landed herself in hot water last year after she failed to disclose that she was paid more than £200,000 by the crypto company EthereumMax to publish an Instagram post about its untested crypto EMAX tokens.

Kardashian, who has 344m followers on Instagram and nearly 75m on Twitter, was handed a £1m fine by US regulators for it.

The regulators warned the public to think twice before taking investment advice from celebrities and influencers.

Action film star Steven Seagal and boxer Floyd Mayweather Jr have also been fined in recent years for flouting rules about crypto promotions.

Former Premier League footballer Michael Owen also came under fire last year for promoting a new crypto investment, claiming it could not fall in value.

The ex-Liverpool and Real Madrid striker later deleted the tweet after discussions with the UK advertising watchdog. FCA chief Charles Randell previously said that influencers were guilty of fuelling ‘delusions of quick riches’ and echoed concerns about investments that are unregulated and risky.

Myron Jobson, a senior personal finance analyst at Interactive Investor, said that the rise of so-called fin-fluencers is a ‘headache’ for the regulators.

He said: ‘The fear is the FCA has only made a splash in its efforts to turn the tide of misleading adverts and financial scams.’

Jobson also explained how social media is a ‘difficult beast to tame’ in the context of misleading adverts. Damian Green, Conservative MP and acting chairman of the Commons digital, culture, media and sport committee, praised the watchdog’s latest move to stamp out misleading financial ads.

‘It is an area that is new and wide open for scammers that taps on a desire to get rich quick,’ he said.

Green also warned that the biggest challenge for regulators would be staying ahead of the game, especially when more and more fraudsters are abusing vulnerabilities brought about by the cost of living crunch.

Sarah Pritchard, executive director of markets at the FCA, said: ‘While households continue to be affected by the rising cost of living, the FCA is concerned that people struggling with their finances may be more susceptible to scammers or adverts showing high-risk, unregulated products.’

She added that the FCA would continue to put pressure on social media firms to stop allowing illegal promotions that ‘put people’s hard-earned money at risk’.

This post first appeared on Dailymail.co.uk