Under scrutiny, some of the world’s biggest social media platforms are on the brink of a showdown with the European Commission, spurred by a grievance lodged by the European consumer group, BEUC.
Instagram, Twitter, TikTok, and YouTube, four giants in the industry, find themselves implicated in a dispute centered on accusations of deceptive advertising associated with cryptocurrency assets.
The BEUC, representing consumers’ interests throughout Europe, voiced their concern last Thursday, alleging that a surge in misleading crypto asset ads on social media platforms constitutes an unfair trade practice.
This, they argue, exposes unsuspecting consumers to potentially significant financial losses. From pop-up ads to influential content creators, the exploitation of social media platforms for such practices has spread alarmingly, according to the BEUC.
Their claims aren’t without foundation. Last year’s collapse of FTX, coupled with recent legal actions by U.S. regulators against Coinbase and Binance, has turned the spotlight onto issues surrounding consumer protection in the context of crypto assets like bitcoin and ether.
In response, the BEUC has appealed to the Consumer Protection Cooperation Network, pressing for an enforcement of stricter advertising policies on cryptocurrencies.
They also called for measures to deter influencers from misleading consumers. The effectiveness of these measures should be communicated to the European Commission, the BEUC added.
Calls for cooperation to curb misleading crypto promotions
The BEUC isn’t standing alone. Nine of its members have joined the consumer group in its complaint, adding weight to its demand that social media platforms adapt their advertising policies to prevent misleading promotions of cryptocurrencies.
They’ve also sought the assistance of European Supervisory Authorities for financial services, recognizing the need for collaboration across sectors to effectively tackle this issue.
The BEUC and its members propose that the supervisory bodies could provide invaluable guidance to ensure that platforms adjust their advertising strategies in line with regulations, therefore safeguarding consumers from false promises and scams.
The BEUC’s Director General, Monique Goyens, emphasized the timeliness of this issue, referring to the recently adopted Market in Crypto Assets Regulation (MiCa), the first comprehensive set of rules for cryptoasset regulation.
Although an essential step, the legislation doesn’t currently apply to social media companies reaping benefits from crypto advertising.
“We are turning to the authorities in charge of protecting consumers,” Goyens stated, underscoring the need for social media platforms to assume their responsibility in protecting consumers from crypto scams and false promises.
With the growing support from consumer groups across Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia, and Spain, the call to regulate crypto advertising on social media platforms is garnering international attention.
As these platforms face potential regulatory action, the European Commission and consumer authorities are urged to heed the alarm and take decisive steps towards mitigating deceptive practices.
The world watches as the debate unfolds, awaiting the implications for the future of crypto advertising on social media platforms.
