UK FCA Warns of Social Media Influencer In Forex Retail Market

In recent years, social media such as Facebook, Instagram, Twitter or LinkedIn as well as messenger services such as WhatsApp and Telegram have been used by mostly illegal providers of investment products and unlicensed forex brokers to acquire clients. Word-of-Mouth marketing is a powerful instrument. In the era of binary options and cryptocurrencies, Google, Facebook & Co have therefore issued advertising bans for such binary options, CFD, or crypto schemes. Nevertheless, Facebook groups and telegram channels were used as “boiler rooms” for the sale of financial products.

Such influencers have positioned themselves as “ICO advisors” in the ICO hype 2017. Celebrities were paid to sell ICOs and cryptos to their followers through their social channels. However, the advertising and marketing of financial products is only permitted with appropriate licensing or registration with the relevant financial market supervisory authorities. The US SEC has therefore warned and punished some of these celebrities such as Floyd Maywheater or John McAfee.

It is undeniable that social media and messenger services shape our lives today and provide the digital runtime environment for our lifestyle. Professionally and privately. Marketing in this new environment is correspondingly important for the brands, companies and institutions. However, regulatory framework and prohibitions also apply here, i.e. offering, promoting or selling financial products need a respective permission from regulators.

On May 2, 2019, the UK Financial Market Authority FCA issued an investor warning against a certain Molly Ramm who had advertised Forex Broker through her Instagram account. She has sold her followers a “get rich quickly” concept with forex brokers and binary options. On her Instagram site with some 12,000 followers she has presented her success with forex trading in the form of new real estate investments, luxury clothing, expensive cars, and luxury travel. Allegedly she made GBP 200,000 with an investment of only 4,000 and established a “six-figure” mindset thanks to forex trading. Bloomberg has reported extensively on the Molly Ramm case.

After the public warning by the FCA, the Molly Ramm account on Instagram was deleted. On Instagram, however, there are dozens of other illegal influencers and Molly Ramms. On Ingrum, you can find some of them under the Hashtag #FXalerts. Beautiful people who seem to be successful with Forex Trading show their luxury lifestyle and try to motivate their friends and followers to join in. Molly Ramm was just one of many illegal forex marketers. Some others are a Lucy Beck, a James Willian or John Eric.

In recent years, new agencies such as Singapore based Affable have emerged that have focused on identifying social media influencers and conducting influencer marketing campaigns and word of mouth. This gives people with lots of followers and friends a new source of income. The cautioned Molly Ramm was one of the influencers of Affable. Also on their website, the Molly Ramm account was deleted in the meantime.

You can find a good article about influencers and meme-marketing by Beck Lorsch on Medium: How Instagram Meme Pages Market Drugs, Scams and More to Kids.

A lesson to learn – under most jurisdictions it violates financial laws to offer, promote or sell financial products through social channels to followers and friends without the respective permission. As a result, many affiliate and referral systems are operating at least in the regulatory grey area. Be careful when promoting forex trading and other financial instruments to your friends and followers.