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Europe’s largest consumer advocacy group accuses cryptocurrency marketers on popular social networks of misleading advertising and thereby exposes consumers to serious harm. A complaint has been filed with the European Commission.
On June 8, the European Organization for Consumers (BEUC) released the report “Hype or Harm? The Great Cryptocurrency Social Media Scam”. In a 20-page document, BEUC states that consumers are not fully aware of the risks associated with cryptocurrencies.
Today BEUC & consumer groups in 8 countries are taking action against TikTok, Instagram, Twitter & YouTube for facilitating the misleading promotion of cryptocurrency assets on social media . We’ve filed a complaint with @EU_Commission and consumer authorities: https://t.co/b6NYsBl4VM pic.twitter.com/w5iLMy4h1i
— The Consumer Voice (@beuc) June 8, 2023
The report provides examples from Instagram, Youtube, Twitter and TikTok, which are called “key players” in cryptocurrency advertising. In the case of Facebook, it is noted that advertising of cryptocurrencies circumvents the rules by prohibiting the promotion of unlicensed financial platforms. The ad said:
“TikTok, Instagram, Twitter, and YouTube are responsible for spreading misleading advertisements for cryptocurrency through ads and influencers. This is an unfair commercial practice that causes serious harm to consumers (loss of significant amounts of money).”
As for Twitter, the report mentions Elon Musk’s decision to introduce Doge, Dogecoin’s mascot, despite the platforms’ own ban on any cryptocurrency advertising. BEUC also mentions so-called “financiers” as “an important source of information” for younger audiences.
Related: EU officials want all AI-generated content to be tagged
Despite the efforts of individual national regulators to combat misleading advertising, the issue still lacks a comprehensive approach. According to the report, there is already a legal framework for taking action at the EU level – the Unfair Commercial Practices Directive (UCPD), and there is a body that will lead enforcement – the EU Consumer Protection Cooperation Network (CPC Network):
“The issue is still being addressed at the national level in the main, although this will require a common approach from the CPC network, acting collectively on the basis of the UCPD and focused on platforms used to promote cryptocurrency assets and related services.”
Meanwhile, in France, the Senate has approved an amendment allowing registered crypto companies to hire social media influencers for advertising and publicity purposes.