Meta's Instagram, Alphabet's YouTube, TikTok, and Twitter, are being called out for allowing promotional cryptocurrency ads on their social media platforms – ads that essentially mislead consumers to invest in the volatile digital currencies.
The European Consumer Organization (BEUC) is accusing a slew of social media giants of allowing cryptocurrency platforms to buy space on their sites, facilitating the belief that purchasing crypto is a sound investment.
The BEUC filed a complaint Thursday with the European Commission and other consumer authorities in an effort to reign in the false advertising.
“These social media companies are responsible for allowing misleading advertisements of crypto assets to multiply on their platforms (both through advertising and influencers),” the complaint said.
“This constitutes an unfair commercial practice, as it exposes consumers to serious harm i.e., the loss of significant amounts of money,” it said.
The consumer watchdog group says that under the EU’s Unfair Commercial Practices Directive, social media platforms need to exercise a certain level of care to ensure their users are not harmed by others, including influencers.
The complaint coincided with the release of a 20-page report on the matter titled, Hype or harm? The great social media crypto con, complete with an illustration of the infamous Dogecoin cryptocurrency mascot, the Shiba Inu dog.
The report talks about the recent wave of “finfluencers” on social media – influencers promoting financial investments or financial products – that often promise consumers high returns and quick gains.
In Europe, TikTok has banned all content related to crypto, yet ads like the one pictured below are still being shown on the video platform there.
The report points out that some of these “finfluencers” have tens of thousands of followers.
“Some [consumers] are buying these assets with unrealistic expectations of price growth, and without realizing the high risks involved,” said Verena Ross, the Chair of the European Securities and Markets Authority in the report.
Additionally, the Mac daddy of ‘finfluencers,’ billionaire Elon Musk, is facing legal battles over his viral promotions of the cryptocurrency Dogecoin on Twitter – hyping the coin before and after he bought the social messaging platform in the fall of 2022.
Musk is being accused by investors of engaging in a “Crypto Pyramid Scheme” by manipulating the market value of the digital coin via promotional antics, even promoting the crypto on Saturday Night Live.
"Dogecoin…. is not anything at all…. You can't eat it, grow it, or wear it…. It's not based upon or tied to anything of value…. It's simply a fraud whereby "greater fools" are deceived into buying the coin at a higher price," the class action suit against Musk said.
Meanwhile, the US Securities and Exchange Commission just filed lawsuits this week against two popular crypto exchange platforms, Coinbase and Binance, for deceptive practices.
The lawsuits, along with last year's collapse of FTX, have sparked the most recent concerns over consumer protections and crypto assets.
The BEUC is asking Europe’s Consumer Protection Cooperation Network (CPC) to require online platforms to adopt stricter advertising policies on crypto and take measures to prevent influencers from misleading consumers.
The group called on the cooperation of Europe’s consumer and financial protection bodies to monitor the social media platforms for compliance.
Last month, the European Union adopted the world's first comprehensive set of rules for crypto, dubbed the Market in Crypto Assets Regulations (MiCa).
Citing MiCa, BEUC's Director General Monique Goyens pointed out that the new legislation does not apply to social media companies advertising and promoting crypto sales.
"This is why we are turning to the authorities in charge of protecting consumers to ensure Instagram, YouTube, TikTok, and Twitter fulfill their duty to protect consumers against crypto scams and false promises," Goyens said.
Nine EU consumer advocate groups, including in Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia, and Spain, have also signed the BEUC complaint.
The BEUC report estimates that an average of 15% of EU citizens across all member nations currently own, or have owned, crypto.
The report also states, besides the well known Bitcoin, LiteCoin, and Etherium, there are more than 17,000 different crypto assets on the market today.
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