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South Africa’s Financial Sector Conduct Authority (FSCA) is tightening its grip on social media, vowing to crack down on the influence of financial influencers (“influencers“) who peddle financial advice that potentially mislead consumers. 
This focus on social media scrutiny emerged in the <a href="https://www.fsca.co.za/Pages/Default.aspx" target="_blank" rel="noreferrer noopener">FSCA</a>‘s annual report, highlighting the growing power of social media personalities. 
“Social media influencers,” the report states, “have been shown to wield significant influence over consumer behaviour through social media content.” 
This influence extends to the financial realm, with the rise of “finfluencers” specifically promoting investment products. While the FSCA acknowledges the potential for influencers to boost financial literacy, it fears there are serious concerns to be taken note of. 
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 The FSCA has seen evidence of finfluencers conveying misinformation, and perpetuating scams through social media. This presents a clear risk to the public. 
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“The public shouldn’t rely on social media and celebrity endorsements for financial decisions,” the report warns. Instead, the FSCA emphasises the importance of consulting authorised financial advisors. 
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The report cites troubling instances of finfluencers spreading misinformation and promoting scams. This is particularly concerning on platforms like TikTok, where dubious high-yield investment schemes and copy trading platforms are heavily advertised. 
Even prominent figures like Victor Matfield, Lucas Radebe, and Herschelle Gibbs have unwittingly endorsed schemes that later triggered FSCA warnings. 
Read also: <a href="https://technext24.com/2023/08/23/fpb-guidelines-social-media-south-africa/" target="_blank" rel="noreferrer noopener">South Africa introduces new guidelines to curb harmful content on Facebook, WhatsApp</a> 
<h6 id="beyond-finfluencers-the-fsca-identified-other-online-threats" class="wp-block-heading">Beyond finfluencers, the FSCA identified other online threats:</h6> 
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 <li>Deepfake scams: The report highlights the rise of deepfakes, where AI is used to create realistic videos or audio featuring public figures promoting fraudulent schemes.</li> 
 <li>Impersonation scams: Fraudsters are impersonating legitimate financial institutions and even the FSCA itself to solicit funds from unsuspecting individuals. The FSCA urges the public to verify the legitimacy of any entity offering financial services.</li> 
 <li>Social media fraud: The report emphasises how social media platforms provide a breeding ground for scams. Fraudsters exploit platforms like Telegram and WhatsApp to reach a vast audience. Luring victims with promises of unrealistic returns, they often use fake testimonials and fabricated screenshots to build trust.</li> 
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“The public is urged to contact the FSCA to verify the legitimacy of entities offering trading or investment services,” it said. 
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“Criminal activities have extended to impersonating regulators,” it continued. 
“The FSCA has identified several instances where fraudsters impersonated the FSCA, its leadership officials and its staff members.” 
The regulator emphasises the importance of staying vigilant. They advise against sharing personal financial information online and warn of “mule accounts” used by fraudsters to launder money. 
“The FSCA focuses its enforcement efforts on safeguarding financial customers from harmful business practices and criminal activities,” it said. 
“The increasing globalisation, interconnectedness, and technological advancements have provided fraudsters with more sophisticated tools and larger platforms to exploit financial customers.” 
As a result, the FSCA said it and its enforcement methods have had to adapt continuously.

South Africa set to regulate content of financial influencers to protect consumers

Technext.ng

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