Seven social media influencers, including reality TV stars, have been sentenced at Southwark Crown Court for their role in the promotion of an unauthorised foreign exchange trading scheme.
Contracts For Difference (CFDs) are high-risk derivatives. The FCA has previously said that 80% of customers lose money when investing in CFDs because of the risks. They are often highly leveraged, which means they use debt to try and amplify returns, which can result in investors losing more than they invested.
In the UK, the FCA has imposed restrictions on how CFDs and CFD-like options can be sold and marketed to retail customers. The FCA has been carrying out work to address consumer harm in the UK in this sector.
Seven influencers, including TOWIE's Lauren Goodger, Geordie Shore's Scotty T and Love Island's Rebecca Gormley, have admitted breaking the law after illegally promoting the financial products on Instagram. The combined following of their Instagram accounts was 4.5 million.
The offences are punishable upon conviction by a fine and/or up to 2 years’ imprisonment.
The fines totalled more than £7,000, with Lauren Goodger receiving the biggest fine of £3,750.
The group were also ordered to pay costs of more than £14,000.
Steve Smart, executive director of enforcement and market oversight at the FCA, said: “These influencers betrayed the trust of those who followed them. We’ll continue to work with responsible influencers and go after those who put the financial wellbeing of their followers at risk.”
