The European Securities and Markets Authority (ESMA) has called on major digital platforms to do more to combat the growing threat of unauthorised financial promotions spreading online.
In a letter sent to key players including X, Meta, TikTok, Alphabet, Telegram, Snap, Amazon, Apple, Google, and Reddit, the regulator stressed the need for proactive action to protect consumers from fraudulent financial content.
According to ESMA, a surge in misleading financial promotions on social media and other digital platforms is placing EU retail investors at increasing risk. Scammers are exploiting these channels to advertise financial services from firms that do not hold the necessary authorisations, often enticing users with high returns or false endorsements. These illicit adverts can result in direct financial loss for victims and erode broader trust in regulated financial markets.
The regulator urged these platforms to implement more robust monitoring and enforcement mechanisms to detect and remove unauthorised financial content. The call to action forms part of ESMA’s broader strategy to strengthen investor protection across the EU and signals increasing scrutiny over the role of tech companies in facilitating financial harm.
This move also aligns with a wider international push to address online financial fraud. Just last week, the International Organization of Securities Commissions (IOSCO) launched a similar initiative, underscoring the global dimension of the problem and the importance of coordinated efforts to tackle it.
In its communication, ESMA reiterated the significant societal harm posed by digital financial scams, warning that failure to act could lead to growing financial losses and further distrust in the financial system.
By engaging directly with some of the world’s largest platform operators, ESMA is ramping up pressure on the digital ecosystem to take responsibility in preventing the misuse of their networks by fraudulent actors.
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