Research from TSB indicates that of the 31 percent of individuals who followed financial advice on social media, more than half (55%) incurred financial losses.
TSB conducted a survey of nearly 2,000 social media users, revealing that nine in ten (90%) had encountered investment opportunities on these platforms. Over two-fifths (43%) were open to investing based on what they saw. A significant number trusted this content, with 73% of those aged 25-34 either having acted on the advice or planning to do so, compared to just 27% of individuals over 55. However, more than two-fifths (42%) admitted they didn’t know how to verify the credibility of online information.
As a result, 55% of individuals who took action on such advice ultimately lost money. TSB’s internal data shows that over two-thirds (67%) of push payment investment fraud cases originate from social media, accounting for 71% of all investment fraud losses, with an average loss of £3,706 per case. Nearly two-fifths (36%) of these cases initiated on Facebook, followed by TikTok (17%), Telegram (17%), Instagram (14%), and WhatsApp (14%). Facebook and WhatsApp alone represented significant losses, at 36% and 35%, respectively.
Surina Somal, director of everyday banking at TSB, emphasizes the dual nature of social media as both a potential resource and a source of misinformation and unregulated investments that can jeopardize finances.
The Financial Conduct Authority (FCA) is urging lawmakers to create legislation targeting Big Tech and finfluencers promoting unauthorized financial schemes. During a Treasury Select Committee inquiry in May, FCA officials expressed concern over the inability of major tech firms to regulate those disseminating unsuitable investment opportunities. They noted that some finfluencers continued to operate by simply switching accounts even after being asked to cease activities.
Current legislation imposes a maximum of two years in prison for social media influencers acting illegally, but the FCA argues this is not a strong enough deterrent and is advocating for an extension of the maximum penalty to five years.