TikTok creators have been offering risky trading tips in the wake of the GameStop shares frenzy, a UK regulator has warned. The Financial Conduct Authority (FCA) said people should be wary of users promising high-return investments.
Many videos contain financial advice without disclaimers about the risks
Several popular video-makers on TikTok encouraging people to buy shares in GameStop, BlackBerry and AMC. The share price of these companies saw a boost at the end of January, as people on a Reddit message board encouraged one another to invest.
Millions of videos have been posted using hashtags such as #bigstocktips, #fintok, #stonks, #stocktok and #stockstobuy. Many of the videos fail to warn users that the content should not be taken as financial advice and that making investments carries a risk.
TikTok videos encouraged people to invest in the crypto-currency Dogecoin
Several videos used examples of past market performance as an indication that users would receive a profit in the future. Past market performance can never guarantee future profits.
One popular astrologer with more than one million followers suggested that the position of the planets could affect the price of crypto-currency.
The FCA hoped the financial harms would be consider in forthcoming online safety bill
This February is not the cutest for Bitcoin Mercury is in retrograde. The same account also made forecasts for Tesla, GameStop and the crypto-currency Ethereum. Consumers should be wary of adverts and advice online and on social media promising high-return investments, and should always do further research on the product they are considering. There are risks with taking unregulated investment advice and we engage with social media platforms to have pages which breach our regulations taken down.FCA Spokeswoman
The crypto-currency trading platform Paxful analyzed more than 1,200 TikTok videos and found that 14% of them encouraged users to make certain financial decisions without a warning about the risks involved. In total, those videos had clocked up 16,765,837 views and 2,239,684 likes.
Since TikTok videos are short, there is little time in which to fully explain the financial risks, said Nick Agwuncha, co-founder of Money Medics, a start-up that provides financial education for millennials.
Videos that encourage risky, over-simplified and impulsive financial decisions without appropriate disclaimers can mislead young or inexperienced viewers, damaging their finances as a result.Blog Post
You shouldn’t be gullible to get-rich-quick schemes. If you’re looking at personal finance and investing, you should always try to take a long-term mindset, do your due diligence and research.
Some influencers may be self-motivated to recommend certain stocks they have already invested in, to increase demand and push up the share price, he added.
We are committed to promoting a safe environment on TikTok, and actively work to educate our community about online safety and media literacy.TikTok
TikTok said it removed content that depicted or promoted investment schemes with promises of high returns, fixed betting or any other types of scams. TikTok removed content that deceives people to gain an unlawful financial advantage.