Unpaid social media influencers fall within the scope of U.K. financial advertising rules and may be breaking the law if they fail to get appropriate approval, according to the Financial Conduct Authority (FCA), which gained oversight of crypto promotions with the approval of the Financial Services and Markets Act at the end of June.
Influencers who are not paid directly by the firm, but post online with the hope of being hired later or to acquire more views for themselves fall within the scope of promotion rules alongside those who do get paid, the FCA said in a consultation on social media advertising rules for the financial industry on Monday.
If they communicate financial promotions without approval of an authorized person, they are likely to be “communicating an illegal financial promotion,” the FCA said. Influencers who fall within the scope of the FCA rules would need to make sure that their promotions are fair and not misleading. Even memes, often images with superimposed text that are copied and reused across users’ accounts, could count as financial promotions, according to the consultation document.
Even before the FCA’s involvement, social media crypto promoters found themselves under the microscope. Last year, Jessica and Eve Gale – former contestants on the U.K. reality show Love Island – were told to stop misleading their Instagram followers with pro-crypto posts by the Advertising Standards Authority, the ad industry’s self-regulatory organization.
The FCA published its promotion rules for the crypto sector in June, setting out that promoting products using financial incentives like airdrops would be banned and stating that crypto companies needed clear risk warnings with their ads. Registered crypto companies will be allowed to approve their own ads for a limited time once the new financial promotions regime comes into force in October.
Update(July 18 13: 39 UTC): Adds memes comment from consultation document to third paragraph.
Edited by Sheldon Reback.