Stock market scams: social networks, the eldorado of crooks

Haro on fake trading experts! Recently, the sector’s supervisory authorities have indeed decided to coordinate their fight against “finfluencers”, these financial influencers who, through publications on social networks, work to convince their subscribers to bet on the cryptocurrencies, currencies and other speculative products. The DGCCRF (General Directorate for Competition, Consumer Affairs and Fraud Prevention) will closely check that their messages comply with the regulations on advertising, to which they most often fall.

While the AMF (Financial Markets Authority) has launched a warning campaign on Instagram against this “influencer marketing”. And that ESMA, the European Securities and Markets Authority, recalled the rules applying to these investment recommendations, such as the disclosure of any conflicts of interest.

It was indeed time to put our nose in the business of these influencers. As you will see, there are first of all the best known of them who, like Nabilla, are content to post one or two messages on their general public thread, to praise the merits of trading or cryptocurrencies. . But many others go further, by acting as financial advisers.

This is the case of Marc Blata, who has been through several reality TV shows, and now specializes in cryptocurrencies. Selected piece of his sales pitch, recorded by us on the private Telegram messaging system, more discreet: “You missed this week the opportunity to take profits 10 times, the ratios are at the top of the top. Get started, try to go for financial independence, you have gold in your hands with your phone.” And we pass you his – many – tutorials on trading concepts, or his video reviews of the week…

We lose nothing by remembering it: if these influencers dangle enrichment, lifetime annuity and beautiful cars, it is quite the opposite that awaits their subscribers. “Far from the promised Lamborghini, the good surprise will already be to recover its bet”, summarizes Michel Dinet, a manager specialized in monitoring such scams, and president of Sapienta Gestion. According to an AMF study, 31% of French people recently exposed to a financial scam have even been through social networks. “Influencers are a new entry point for targeting a younger and more modest audience than that usually targeted,” confirms Claire Castanet, director of relations with investors at the AMF.

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The risk, to listen to these smooth talkers, is indeed to open an account on a trading platform based outside the European Union, which is therefore not subject to any serious regulation. But above all, to put your finger in the gears of a Ponzi scheme, this scam where the money of the last savers is used to pay the gains of the first, until the collapse of the system. It exists in different more or less sophisticated versions.

There is, for example, the “pump and dump”, or kettle scam, which consists of artificially driving up the price of an asset previously purchased by the crooks, by providing investment advice to Internet users registered on the platform, before… reselling everything, and making these same Internet users suffer the losses (the price falling immediately, in the absence of new buyers). American influencer Kim Kardashian was recently suspected of having participated in such manipulation, through her promotion of the cryptocurrency ethereum max.

Sometimes it’s just a trading education, rather than an investment, that scammers are trying to sell. They are then remunerated on the sale of complete packs, via pyramid structures: the Internet user who convinces three new customers to pay is given free access to training. A few other recruits, and now he is promised 500 dollars a month, then 1,000, 2,000, etc. Needless to say that these trainings are most often bogus, and that the influencers who participate in the scheme know nothing about trading or cryptocurrencies.

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Worse, most of them are interested in the game, without revealing it. “The platforms pay them for the deposits they help collect through their sponsorship,” confirms Michel Dinet. Such a mixture of genres earned Nabilla a fine of 20,000 euros for unfair commercial practices. “As soon as an influencer is paid to deliver a communication controlled by a company, he is subject to the same rules as any media in terms of advertising”, confirms Stéphane Martin, director general of the ARPP (Regulation Authority advertising professional).

But then, how to protect oneself from such hucksters? You have to start by… guarding yourself. “The crooks rely on the cognitive biases of their victims, such as that of Dunning-Kruger, according to which the least qualified in a field overestimate their skills”, describes Michel Dinet. The use of abstruse language indeed gives the illusion that one is speaking to an expert. “By using this technical vocabulary, the investor convinces himself that he is more knowledgeable than his parents, teachers or friends”, continues Michel Dinet.

Also remember to check that the platform promoted is not on the black list of intermediaries, kept up to date by the AMF. You can also consult the Regafi, a register which lists the operators authorized to offer their services in France. As for those who call themselves trading gurus, they must, in principle, show their credentials. This is how CIFs (financial investment advisers) must be registered in the Orias register (Organization for the single register of insurance, banking and finance intermediaries). “Providing investment advice requires a regulated status”, confirms Claire Castanet.

The posts of these influencers often direct to unregulated platforms

Last July, the ex-star of reality TV Nabilla was sentenced to a fine of 20,000 euros for deceptive commercial practices. An amount related to the profit received by the influencer, who had promoted the Traderlebitcoin site, itself a business provider for the eToro platform, on her Snapchat account, without revealing that it was paid advertising. She had alleged the free service, and yields of up to 80%. “Remarks likely to mislead the consumer”, underlined the DGCCRF.

A lawsuit was filed in January in a California court against the star, following a June 2021 post in which she invited her 250 million subscribers to join the “ethereum max community”, a collective of investors in cryptocurrencies. For the plaintiffs, this promotion campaign was nothing more than a kettle scam, consisting of inducing savers to buy an asset, so as to drive up its price, before reselling everything when it arrived. at its highest. This causes, then, the collapse of the course, and widens the losses of the investors. Pile the course followed by ethereum max, in the summer of 2021.

This couple of influencers, baptized JLC Family, encouraged their large community (no less than 4 million Instagram subscribers for Jazz, and 3.1 million for Laurent) to join them on the Cypriot platform IronFX, and to apply their advice. trading, provided via private Telegram messaging. Last September, when neither Jazz nor Laurent mentioned the partnership that seems to link them to this platform, many disappointed Internet users denounced their practices. And Jazz’s Snapchat account was closed.

Passed by various reality shows such as Intimate Confessions or La Belle and her almost charming princes, the influencer has now also embarked on “copy trading”: from Dubai, he encourages the approximately 4 million subscribers to his account. Instagram to follow its tips and advice for investing in cryptocurrencies. It puts online tutorials and reviews of the week. And refers to an unauthorized trading platform in Europe.

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