Which? research uncovered numerous investment ads on Facebook and Instagram that mislead investors into potential scams. This discovery coincides with a significant rise in losses attributed to investment scams. At I&L, we remain vigilant in identifying emerging scams and have previously shared information about recognizing signs of investment scams. This time, it is concerning that Facebook and Instagram, both falling under the Meta umbrella, are hosting these misleading ads.
These ads make bold claims of “sensational, life-changing returns” on both platforms. What’s worrisome is that people may mistakenly perceive social media ads as more credible than the typical pop-up ads we are accustomed to encountering.
According to Action Fraud, victims of “clone” firm investment scams face an average loss of over £45,000. The Financial Ombudsman Service’s latest quarterly data, covering the three months until June, indicates that investment scams are the fastest-growing category of “authorized” scams.
Investigations
Between August 2021 and October 2022, an investigation discovered that Meta’s platforms featured a total of 1,064 adverts, with 484 of them being investment-related. Among these, half promoted investment products, while the remaining focused on providing investment tips, training, or advice.
Out of the investment-related adverts, one in four were related to property, which typically represents the most prevalent investment opportunity. Additionally, one in five adverts centered around cryptocurrency and non-fungible tokens. Interestingly, one in ten investment products promised substantial returns without specifying the means by which the company would achieve them. This raised significant concerns. Furthermore, the investigation identified 89 adverts lacking a risk warning and making claims of guaranteed returns, which served as another major warning sign.
Rocio Concha, director of policy and advocacy at Which, highlighted the need for the government to pass the Online Safety Bill to protect people from the risk of “immense financial and emotional harm”.
He said: “Otherwise we could be waiting even longer for alternative action to tackle online fraud infiltrating one of the world’s biggest search engines and social media sites,”
Repeat Perpetrator
The FCA has flagged up one particular company previously . They go by the name ‘Tesler’- impersonating an actual regulated company in the UK. We can assume the similarity to ‘Tesla’ is fully intentionally- and meant to misled people.
Which found 20 adverts for Tesler which raised eight different serious risk flags. Pressure to set up a trading account and promising an 87% success rate being one of them
New Measures
The Financial Conduct Authority (FCA) has proposed new measures to help social media platforms combat misleading marketing.
The new measures will require businesses to demonstrate they have the expertise for the promotions they want to approve. They will also be required to report back to the FCA on financial promotions they have approved so that the watchdog can crack down on these rogue traders.
Scam Alert
This message serves as a warning against potential online scams, including website scams and investment scams. Please exercise caution and conduct thorough research before engaging in any online transactions or investments. Protect your personal and financial information from fraudulent activities, and consult with trusted sources for advice.
Insolvency and Law Peter Murray is an award-winning consultancy firm specialising in Insolvency, debt purchasing and business rescue.