Licensed financial advisers have never been under more scrutiny – and given the findings of the financial services royal commission that can only be a good thing.
But for all those who choose to gather their information from a variety of sources, more and more red flags are being raised by the industry watchdog.
The Australian Securities and Investments Commission (ASIC) has ‘finfluencers’ in its sights and is also warning about financial ‘disinformation’.
Nestegg reports that financial disinformation can take a number of forms and, of course, be hard to spot.
There is nothing new about dodgy dealings and fake promises – think investment scams, pump-and-dump schemes and pyramid selling – but concerns are sky-high because such tactics are being supercharged through social media platforms such as Facebook – or Meta as it’s now called – and TikTok.
Read: Why the robo-advice industry is taking off in Australia
ASIC warns that it is receiving an increasing number of reports from consumers who have lost money after responding to advertisements disguised as fake news articles.
Fake articles directly induced “abnormal trading activity” and upped the level of price volatility in the market in the short term, according to research conducted by MIT, Yale University and AQR Capital Management.
“In addition, the awareness of fake news … indirectly affects legitimate articles, causing market participants to discount all news from these platforms,” they said in a research paper titled Fake News in Financial Markets.
And it was the capacity to spread financial misinformation rapidly that was “noteworthy and dangerous”.
Read: Eight rules for getting the most out of your money
Facebook/Meta says it removes content that “purposefully deceives, wilfully misrepresents, or otherwise defrauds or exploits others for money or property”.
An Australian Associated Press (AAP) fact-checker, Peter Bodkin, said that while false or misleading financial-related claims are something they monitor for, it’s “not one of the major threads of misinformation or disinformation that we come across as fact-checkers, at least at present”.
“The financial misinformation that we do see tends to be fairly unsophisticated, like celebrities being falsely identified as endorsing dubious cryptocurrency-related scams,” he says.
He says consumers need to take “appropriate steps” to identify whether something they’re reading or seeing is factual.
“One is to look at the source of a piece of information to work out if it is credible. That goes for material you come across anywhere – from social media to traditional news media, although information from a reputable news outlet is more likely to be accurate than in an anonymous social media meme,” he says.
Read: How to spot a fake review, before it ruins your Christmas shopping
“Where possible, try to find the primary source of the information – the person or organisation it originated from – as well as asking yourself what motives the source you’re relying on may have in skewing information in a certain way and how that may colour what you’re being presented with.”
Mr Bodkin says that if there’s nothing to back up a piece of information – except for some anonymous claims online or an article on a website that’s trying to sell you something – then there’s a good chance it’s not factual.
Warnings are rife about financial disinformation in the cryptocurrency space.
Nestegg reports that earlier this month there were multiple reports that the Israel Investment Fund Group had invested $2.3 billion into bitcoin holdings. Also that Apple had bought $2.5 billion in bitcoin. None were true.
ASIC says it is reviewing “selected” financial influencers on TikTok and other social media platforms. It is also considering updating its regulatory guide on internet discussion sites to clarify rules of engagement for finfluencers on social media.
Do you keep in touch with financial information via social media platforms? Have you seen a quantum leap in disinformation? Why not share your thoughts in the comments section below?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.
