Facebook bans ads for risky investments

Facebook bans ads for risky investments

Facebook has updated its advertising policies to ban promotions for financial products and services which are usually associated with misleading or deceptive promotional practices.

This includes binary options, initial coin offerings and cryptocurrencies, which the Financial Conduct Authority has warned consumers about on multiple occasions.

In a statement on the social media company's website, Rob Leathern, product management director at Facebook, said: "We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception.

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"That said, there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.

"This policy is intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network and Instagram. We will revisit this policy and how we enforce it as our signals improve."

Mr Leathern added Facebook was aware it might not catch every advert which falls into this category and urged users to report those which fall through the cracks.

Earlier this week the FCA warned about the increasing use of social media to promote investment scams, saying it is leading to a changing profile of those who fall victims to fraud.

Research by the FCA showed those aged under 25 were six times more likely to trust an investment offer received through social media than those aged 55 plus.

Binary options allow an investor to make a bet on the price of value of a stock, commodity, currency, index or anything capable of being measured in financial terms.

The time periods involved tend to be very short, ranging from between 30 seconds to five minutes.

The FCA's research on this area found the majority of consumers who invest in binary options lose money and find it hard to make sustained profits over a series of bets.

It has also pointed out that in most cases, the firm a consumer buys options from benefits when they lose.

The European Securities and Markets Authority is considering a ban on the marketing, distribution and sale of binary options to retail clients.

Meanwhile the FCA has also raised concerns about virtual currencies such as Bitcoin, saying investors should be prepared to lose all their money.

Initial coin offering issuers accept a cryptocurrency, like Bitcoin or Ether, in exchange for another one related to a specific firm or project.

The FCA said ICOs are "very high-risk, speculative investments".