ASIC has expressed concerns about the potential risks posed by ‘finfluencers’ or financial influencers who use their social media platforms to promote investments or financial products without adequately disclosing conflicts of interest or the risks involved.
In May 2021, ASIC issued a warning to consumers about the risks associated with cryptocurrency and other speculative investments, noting that social media platforms and influencers can play a significant role in promoting these types of investments. ASIC cautioned that investors should be skeptical of promises of high returns and do their research before investing in any financial product or scheme.
Other cases of social media influencers being investigated for misleading advertising over financial products. For example, in 2020, the Australian Securities and Investments Commission (ASIC) took action against two social media influencers who were promoting a high-risk investment product without disclosing that they were being paid to do so. ASIC found that the influencers had breached the Corporations Act by failing to disclose the nature and extent of their relationships with the investment company.
In another case in 2019, ASIC took action against a financial advice company that had engaged a social media influencer to promote its services without adequately disclosing that the influencer was being paid for the promotion. ASIC found that the influencer's posts were likely to mislead consumers into believing that the influencer was providing independent and impartial advice, rather than being paid to promote a particular company.
These cases illustrate the importance of transparency and disclosure in advertising, particularly when it comes to financial products and services. Influencers and companies must ensure that they comply with the relevant laws and regulations, including disclosing any financial incentives or relationships that may influence their endorsement of a product or service.