Financial Influencers: A Growing Scam Threat

Strategic Insights -

Social media platforms are flooded with seemingly successful financial influencers promising a quick path to wealth through easy steps. However, a growing number of these posts are scams that can leave investors more out of pocket. A survey of 1,800 social media users found that 31% of respondents had followed financial tips seen on social media, with 55% reporting a loss. Younger users were particularly affected, with 67% of those aged 16 to 24 and 61% of those aged 25 to 34 saying such posts made them feel worse about their finances.

Key Takeaways:

  • 31% of social media users followed financial tips seen on social media, with 55% reporting a loss.
  • 43% of respondents felt worse about their financial situation after viewing wealth-related posts.
  • Younger users were more susceptible, with 67% of those aged 16 to 24 and 61% of those aged 25 to 34 saying such posts made them feel worse.
  • Finfluencers often falsely flaunt lavish lifestyles and promise guaranteed returns, which are highly risky investments or outright scams.
  • Unauthorised firms or individuals operating in the financial sector can be identified by a lack of FCA registration, making consumers lose access to protections like the Financial Ombudsman Service.
  • Beth Harris, head of financial crime at the FCA, highlights that nearly two-thirds of 18-29-year-olds follow social media influencers, with 74% trusting their advice and 9 in 10 having been encouraged to change their financial behavior.
  • Young people are more likely to be targeted as they 'doomscroll', with reels of content fed to them in response to their consumer profile.
  • Unrealistic promises, pressure tactics, and investments that are difficult to understand are common warning signs of a scam.
  • The FCA's Warning List should be used to check a finfluencer's or company's legitimacy, and customers should be cautious of complex trading schemes.
  • If a scam is suspected, the FCA or Action Fraud should be contacted to report it.

Statistics:

  • 55% of social media users reported losing money after following financial tips seen on social media.
  • 43% of respondents felt worse about their financial situation after viewing wealth-related posts.
  • 67% of those aged 16 to 24 said that social media posts made them feel worse about their finances.
  • 74% of 18-29-year-olds who follow social media influencers trust their advice.
  • 9 in 10 of young followers have been encouraged to change their financial behavior.

Sources:

  • A survey of 1,800 social media users conducted by Censuswide in June (no date provided).
  • Beth Harris, head of financial crime at the Financial Conduct Authority (FCA).
  • Action Fraud's website.
  • The FCA's Warning List.
  • The Financial Ombudsman Service.