GameStop: FCA Warning Over ‘Risky’ TikTok Trading Tips
The Financial Conduct Authority (FCA) said people should be wary of users “promising high-return investments”.
Many videos contain financial advice without disclaimers about the risks involved.
TikTok said it removed content that “deceives people to gain an unlawful financial advantage”.
The share price of these companies saw a boost at the end of January, as people on a Reddit message board encouraged one another to invest.
Other videos encouraged people to invest in the crypto-currency Dogecoin.
Millions of videos have been posted using hashtags such as #bigstocktips, #fintok, #stonks, #stocktok and #stockstobuy.
Many of the videos fail to warn users that the content should not be taken as financial advice and that making investments carries a risk.
Several videos used examples of past market performance as an indication that users would receive a profit in the future. Past market performance can never guarantee future profits.
One popular astrologer with more than one million followers suggested that the position of the planets could affect the price of crypto-currency.
“There are risks with taking unregulated investment advice and we engage with social media platforms to have pages which breach our regulations taken down.”
The FCA said it hoped the government would include “financial harms” in its forthcoming online safety bill.
‘Fast food content’
In total, those videos had clocked up 16,765,837 views and 2,239,684 likes.
“Videos that encourage risky, over-simplified and impulsive financial decisions without appropriate disclaimers can mislead young or inexperienced viewers, damaging their finances as a result,” it said in a blog post.
Since TikTok videos are short, there is little time in which to fully explain the financial risks, said Nick Agwuncha, co-founder of Money Medics, a start-up that provides financial education for millennials.
“TikTok is fast food content. It lacks depth,” he said.
“You shouldn’t be gullible to get-rich-quick schemes. If you’re looking at personal finance and investing, you should always try to take a long-term mindset, do your due diligence and research.”
Some influencers may be self-motivated to recommend certain stocks they have already invested in, to increase demand and push up the share price, he added.
TikTok said it removed content that depicted or promoted investment schemes with promises of high returns, fixed betting or any other types of scams.