The European Consumer Organization (BEUC) and nine of its members (in Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia and Spain) have lodged a complaint with the European Commission and consumer protection authorities against the Instagram, YouTube, TikTok and Twitter for facilitating the deceptive promotion of cryptocurrencies.
According to the Consumer Protection Agency, social media platforms are responsible for proliferating deceptive cryptocurrency advertising, both through ads and influencers.
Going forward, BEUC says that promoting cryptocurrencies is an unfair business practice as it exposes consumers to serious harm i.e. the loss of significant amounts of money.
Under the EU Unfair Commercial Practices Directive, social media platforms must exercise a degree of care to ensure that their users are not harmed by third parties, including influencers.
BEUC Director General Monique Goyens stressed: “Consumers are increasingly being targeted by get-rich-quick promises through social media ads and influencers. Unfortunately, in most cases these claims are too good to be true and consumers risk losing a lot of money without any legal remedy.”
Instagram, Twitter, TikTok and YouTube attacked by consumer protection agency
BEUC claims that cryptocurrencies remain a high-risk investment due to their high volatility and speculative nature, and are unsuitable for many consumers.
Unlike traditional investments, the organization says, cryptocurrencies are not backed by tangible assets and are based primarily on speculation, making them highly volatile.
In addition, BEUC adds that cryptocurrencies can expose consumers to scams and unfair trading practices, resulting in heavy financial losses.
The report “Exaggeration or evil? The Big Cryptocurrency Scam on Social Media“published today, provides multiple evidence of deceptive cryptocurrency promotions on Instagram, YouTube, TikTok, and Twitter, in violation of the platforms’ own advertising policies.
The report also points to the rising popularity of cryptocurrencies in the EU in recent years. According to the data, 12% of consumers in the Netherlands own cryptocurrencies, while in Slovenia that number rises to 18%.
Despite the risks, cryptocurrencies seem to be gaining mainstream acceptance. In the UK, fewer cryptocurrency users see them as a gamble (38%, compared to 47%) and more see them as an alternative to conventional investments.
“Social Networks Enable Cryptocurrency Scams”
In light of the situation, BEUC has requested that social media platforms have stricter advertising policies, with effective enforcement by platforms regarding advertising for cryptocurrencies.
The body also wants to take measures to prevent influencers from misleading consumers about the nature of cryptocurrencies and report to the European Commission on the effectiveness of the measures taken to protect consumers against unfair practices in this context.
Finally, European consumer protection authorities should work with European financial services supervisory authorities to ensure that platforms adjust their advertising policies and avoid misleading advertising of cryptocurrencies.
“While cryptocurrencies will soon be regulated with the new Crypto Asset Market Regulation, this legislation does not apply to social media companies that profit from cryptocurrency advertising at the expense of consumers. That is why we call on consumer protection authorities to ensure that Instagram, YouTube, TikTok and Twitter fulfill their duty to protect consumers against cryptocurrency scams and false promises.”
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
