Almost 8,600 adverts on Instagram, YouTube and Facebook, promising quick and easy profits and guaranteed returns were blocked or scrutinised by the UK financial watchdog in 2022, up 14% on the year before.
Over 8,500 promotions by regulated firms had to be amended or withdrawn, an increase of 1398% compared to 2021, the Financial Conduct Authority revealed.
Many firms were employing bloggers and influencers to promote investment products to younger age groups, the FCA revealed.
Big tech firms, such as Instagram and Facebook owner Meta Platforms Inc (NASDAQ:FB) and YouTube parent Alphabet Inc (NASDAQ:GOOG) will now be held to higher standards in preventing illegal adverts which offer financial advice or recommendations being posted on their social media sites, the FCA suggested.
Investment and pension scams have become increasingly concerning, the watchdog added, as social media provides an easy way for ‘fin-fluencers’ - influencers who discuss financial investments - to spread misinformation.
In one example the FCA provided, a social media influencer promoted unauthorised traders to their followers on at least two occasions, leading the regulator to tell the individual not to use their personal social media to promote financial services, and imposing a requirement on their firm that neither would promote any financial services offered by third parties.
Another company was told to remove posts where it was found to be "seeking to take advantage of the rising cost of living to target potentially vulnerable consumers" among its 70,000 followers.
Elsewhere, an online retail broker with over 1.1mln, mostly millennial, UK retail customers received a temporary ban after "serious concerns" were found with its marketing campaign involving social media influencers "targeting vulnerable consumers with significant debt".
“Unauthorised individuals should not advise people on the merits of certain investments,” the FCA said, calling on social media companies to do more.
“This year, we will continue to put the pressure on people using social media to illegally promote investments which put people’s hard-earned money at risk,” commented executive director Sarah Pritchard.
Better technology has led to the regulator finding misleading ads quicker and a new Consumer Duty, requiring firms to demonstrate information is valid, will be introduced in July.
Instagram and Facebook are among the world's largest social media's based on the number of users, alongside Twitter Inc (NYSE:TWTR), TikTok and YouTube.