The report from the European Consumer Organization (BEUC), accuses these platforms of enabling scams associated with digital assets and highlights the need for stricter enforcement to protect consumers.
Leading social media platforms, including Instagram, TikTok, Twitter, and YouTube, have come under scrutiny in a recent report by the European Consumer Organization (BEUC). In a comprehensive 20-page document, the watchdog highlights the high risk and susceptibility to scams that are prevalent in the realm of digital assets, particularly cryptocurrencies.
The report also sheds light on the role played by crypto influencers in influencing consumers' decisions. The BEUC emphasizes that lax policies on platforms like Instagram and TikTok create an environment where scammers can easily target vulnerable teenagers and exploit their lack of awareness.
The BEUC expressed concern over the dubious approach taken by these platforms, stating that the stance of social media platforms towards crypto advertising is highly questionable, with several platforms failing to adequately enforce their own internal policies.
"Our research found ample evidence of misleading promotion for crypto on Instagram, YouTube, TikTok, and Twitter despite the social media platforms’ advertising policies" - BEUC
BEUC Calls For Stricter Advertising Rules
In its report, the BEUC urges the European network of national consumer authorities, known as the CPC-Network, to take action and implement stricter advertising policies on social media platforms. The organization specifically calls for the inclusion of a prohibition on influencers promoting crypto products in the platforms' Terms of Use. Additionally, the BEUC emphasizes the need for appropriate mechanisms to be adopted by these platforms to protect consumers from unfair commercial practices related to digital assets.
The BEUC’s report comes at a significant time, aligning with the efforts European Union in actively shaping crypto legislation. With the recent approval of the Markets in Crypto Asset (MiCA) legislation, the BEUC seeks to further protect consumers from potential risks associated with digital assets, particularly in relation to advertising and influencer endorsements.
The new rules, expected to be implemented in the EU in 2024, will require firms to obtain a license if they want to issue, trade, and safeguard crypto assets, tokenized assets, and stablecoins within the 27-country bloc. These regulations aim to establish a more regulated framework for the crypto industry and enhance consumer protection. However, the BEUC report highlights that the new legislation aimed at regulating the crypto industry does not directly apply to social media companies that profit from advertising cryptocurrencies, potentially at the expense of consumers. That’s precisely what the BEUC aims to fix.
In the meantime, some social media platforms have already taken steps to address crypto scams. An example of this is YouTube's intervention last month when a cryptocurrency scam related to XRP was being promoted on the hacked YouTube channel DidYouKnowGaming. The team behind the channel alerted their Twitter followers that they had lost access to their YouTube account after their Google account was compromised. Upon being notified, YouTube promptly took action and requested specific information from the YouTuber to assist in regaining access to their account. This swift response demonstrates the platform's commitment to combating fraudulent activities and protecting its users from potential scams.
While the EU has been proactive in enacting crypto legislation, the BEUC report highlights the importance of addressing the role of social media platforms in enabling scams and protecting consumers in the rapidly evolving digital asset landscape, and with the world becoming increasingly social media driven, the suggested regulations from the BEUC could be a crucial first step in maintaining a safer online environment for crypto enthusiasts and content creators.