A consumer advocacy group has filed a formal complaint with the European Commission about the spread of false crypto ads across social media. The group also complained to TikTok.com, Twitter and YouTube.
The Key Facts
The European Consumer Organization, BEUC, filed a complaint with the European Commission and consumer authorities for “allowing misleading advertisements of crypto assets to multiply on their platforms.”
Crypto investments are highly volatile and speculative, exposing consumers to serious harms including scams and the possibility of losing large sums of money, the complaint said, which was jointly filed with nine of the group’s member organizations.
The complaint stated that despite the documented risks of investing in cryptocurrency and the increasing hype surrounding it, few consumers were fully aware of what they were doing and advertisers and influencers who promote crypto products on platforms do not disclose them clearly.
“Consumers are increasingly being promised ‘get rich quick’ investments by ads and influencers on social media,” said BEUC Director General Monique Goyen, many of which turn out to be “too good to be true” and put consumers at risk of losing a lot of money with no recourse.
BEUC urged Europe’s Consumer Protection Cooperation Network, a coalition of national regulators working together at the EU level, to impose stricter policies on platforms for crypto ads and take steps to prevent “influencers from misleading consumers as to the nature of crypto.”
This group also called on European consumers to join forces with the financial regulators in order to stop misleading crypto promotion.
Watch Out For
Regulators could, at EU and national levels, act upon the complaints made against social platforms. They may also take regulatory action in order to punish companies for their actions or to force them into changing. It’s unclear whether they will choose to do so or on what time scale that might happen if they do.
BEUC asked also the network of European Consumer Authorities to assess the effectiveness of the existing measures in protecting consumers from unfair practices such as misleading crypto advertisements. It is the European Commission, one of the EU’s three core institutions and the driving force behind new regulations and legislation of global significance. Though the bloc has recently approved the world’s first comprehensive set of crypto rules—which become law in 2024—Goyens said the legislation “does not apply to the social media companies benefitting from the advertising of crypto at the expense of consumers,” leaving a potential space for future regulation.
Although cryptocurrencies aren’t particularly new, their popularity has increased in the last few years. Many aspects of the industry do not conform to existing laws or regulations. This leaves legislators or regulators, who have failed to or refused to follow the pace of this sector, scrambling in order to keep up. With the growth of interest, there has been an increase in unpredictability and volatility, fraud, misinformation, and deceptive marketing. Kim Kardashian and Lindsay Lohan are just a few of the high profile celebrities who promote crypto tokens and hype to followers. Regulators say that this may be against the law. The collapse of key institutions, such as Sam Bankman-Fried’s FTX, and allegations of widespread misconduct from Binance has highlighted the lack of enforcement and signaled the starting gun for enforcers taking the industry seriously.
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