30 Jan 2018
Facebook has announced a ban on adverts that promote financial products that are linked to “deceptive promotional practices” involving binary options and cryptocurrencies.
The announcement comes a day after regulator the Financial Conduct Authority (FCA) issued a statement urging the public to be vigilant to the threat of online investment fraud.
The social networking giant said although it wants people to discover new products and services through its ads without fear of scams or deception, there are “many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.”
“This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve,” it explained in a statement.
On Monday the FCA warned that fraudsters offering investments in binary options, contracts for difference (CFDs), forex and cryptocurrencies, such as bitcoin, often promote themselves online and via social media channels, such as Facebook, Instagram and Twitter.
“They typically promise high returns and use images of luxury items, like expensive watches and cars, to entice people to invest in their scams. After someone has invested, they distort prices on their website, tie people in with extreme pay-out clauses and even close customer accounts, refusing to pay back their money,” the FCA said.
Binary options investment, which involves making bets on the projected value of stock or currency, this month became a trade regulated by the FCA.
However, an FCA survey shows that people are going ahead with a deal without checking that the firm is regulated.
More than one in five (23%) respondents said that online customer testimonies and reviews increased their trust in an investment company, and yet “scammers are known to create highly professional looking online investment platforms that feature fake customer reviews, logos, and statements, to lure in prospective investors,” the watchdog said.
The FCA has previously warned of possible total losses for those who invest in initial coin offerings (ICOs), describing them as “high-risk, speculative.”
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