The European Consumer Organization (BEUC) has submitted a complaint against social media firms over their complicity in promoting misleading digital currency advertisements on their platforms.
The BEUC’s complaint comes via a report titled “Hype or Harm? The great social media crypto con,” calling on the Consumer Protection Cooperation Network to take action. Platforms mentioned in BEUC’s report include YouTube, TikTok, Instagram, and Twitter, criticizing them over their lax advertisement guardrails.
The consumer group claims that users of the platforms are inundated with a plethora of scam digital currency investment offers in the form of ads or influencer posts, according to the report. BEUC Director General Monique Goyens stated that the volatile nature of the asset class and the absence of regulations on tangible assets increases the risks faced by investors.
“Consumers are increasingly being promised ‘get rich quick’ investments by ads and influencers on social media. Unfortunately, in most cases, these claims are too good to be true and consumers are at a high risk of losing a lot of money without recourse to justice,” Goyens said.
Goyens noted that consumer watchdogs across the European Union (EU) should demand stricter advertising policies from social media platforms regarding digital currencies. Social media platforms are also encouraged to make regular disclosures to the European Commission on the measures designed to protect investors against unfair practices.
Goyens added that the existing regulations, including the Digital Services Act (DSA), fail to address the risks posed by adverts on social media platforms. The BEUC notes that despite the robust nature of the incoming EU Markets in Cryptoassets (MiCA) regulation, provisions on social media control are sparse.
“Crypto will be regulated soon with the new Market in Crypto Assets Regulation but this legislation does not apply to the social media companies benefiting from the advertising of crypto at the expense of consumers,” Goyens said.
The crusade against non-compliant adverts
While EU regulations may seem inadequate in combating the scourge of non-compliant ads, local jurisdictions are picking up the gauntlet to regulate such promotions. The U.K.’s Advertising Standards Authority (ASA) has an impressive streak against offenders, relentlessly issuing warnings and fines to offenders.
The French parliament has approved a bill supervising the use of influencers to promote digital currency platforms. Influencers are expected to ensure that the platforms employing their services are not fraudulent and are expected to seek regulatory opinion when in doubt of the authenticity of a scheme.
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