Amy Ryan was panicking about her savings when she went online for advice. It was April 2020, and the stock market had plunged, draining a nest egg that she had built up over the years.
Ms. Ryan, a 43-year-old sales engineer from Wales, had dumped her portfolio in the crash and was afraid of losing even more. Looking for guidance, she found Kevin Paffrath, a prolific finance influencer who discussed the economy and investing on his Meet Kevin YouTube channel.
“At the time, I was not really well educated in buying and selling shares,” she said, adding that she felt reassured that Mr. Paffrath had about one million followers. “I trusted this guy.”
Social media is an appealing way for inexperienced people like Ms. Ryan to learn how to manage their investments. Content creators are branding themselves as money experts, endorsing a range of financial products from credit cards to cryptocurrencies, and earning a sleek moniker: fin-fluencers.
But a growing number of them have faced accusations of promoting high-risk assets, hyping “pump-and-dump” schemes or simply sharing unqualified advice. Regulations can be unclear or hard to enforce, especially across international borders.
Ms. Ryan had considered herself to be a savvy saver. When the markets began recovering from the Covid crash, she was terrified that she had been rash in selling her portfolio. She paid $532 for Mr. Paffrath’s “Stocks and Psychology” course and mirrored his lead in buying shares in companies that he believed were lucrative. She moved her cryptocurrency into BlockFi, a cryptocurrency lender that Mr. Paffrath promoted.
“It was all going very well,” she said. “Until it wasn’t.”
Over months, she funneled about 32,000 pounds, or $39,000 now, into shares he had mentioned. She had some gains at first, but then her portfolio started to dip. In 2022, BlockFi filed for bankruptcy, locking up cryptocurrency worth about $10,000 at the time, Ms. Ryan said. In all, she lost some £20,000, or about $24,000. She blamed herself for the losses, but added that she wished Mr. Paffrath had been more transparent about the risks of BlockFi.
Mr. Paffrath is one of many influencers who share investment opinions online, and disclaimers on his YouTube channel note to his subscribers, now at two million, that his advice is not personalized. He apologized for promoting BlockFi and said he lost some $433,000 of his own money on the lender. “My true fans understand my ethics and who I am,” he said via text message, but he declined to comment further.
For everyday investors, “at the extreme end, they can lose everything,” said Sue S. Guan, a law professor at Santa Clara University. “I worry that not a lot is being done to help them figure it out.”
Amid the advice is market for fraud. Fake investment opportunities on social media made up nearly $350 million in reported fraud in the first half of 2023 alone, the Federal Trade Commission said.
Certified financial advisers can also be the subject of complaints. Research has linked using an adviser to better financial outcomes, but there is no clear consensus on their value.
In Britain and the United States, most people who dispense financial advice or sell investment products professionally must be licensed. Ms. Guan said regulators could draw clearer lines around what financial advice required a license.
Regulating influencers, however, is a challenge. The internet’s global reach can raise questions about jurisdiction, and analysts say the rules are largely not intended for the influencer age. Authorities may opt to chase after the biggest offenders, but it can be tricky to determine whether influencers are in any way liable for their claims.
Regulators in Britain and the United States are warning consumers that financial advice on social media often comes with ulterior motives. The U.S. Securities and Exchange Commission has pursued celebrities like Kim Kardashian and firms that hire them for failing to properly disclose compensation. (Ms. Kardashian paid $1.26 million in 2022 to settle the case but did not admit wrongdoing.)
“Making investment decisions based solely on information from finfluencers, social media and celebrities may not be a great idea,” an S.E.C. official wrote in a brief.
The U.S. Financial Industry Regulatory Authority fined a brokerage firm $850,000 last March after it said influencers had made social media posts on the firm’s behalf that violated rules.
And in Britain, the Financial Conduct Authority charged a group of reality television stars last May for promoting what it called an unauthorized, high-risk investment scheme to millions of their followers, a case that is expected to go to trial in 2027.
Mr. Paffrath of Meet Kevin was named in a class-action lawsuit filed in Florida that accused him and other YouTubers who promoted FTX, the bankrupt cryptocurrency exchange, of misleading their followers. “People have to put on their big boy pants and realize that if you make a decision because of something you heard online, that’s your responsibility,” he said in a video responding to the lawsuit.
In 2023, Mr. Paffrath, who is now registered as an investment adviser and still offers courses on his site, reached a settlement with plaintiffs, according to a court filing.
Brands should be held accountable for the influencers they hire, and also provide them legal advice, said Felix Pflücke, a law lecturer at the University of Oxford and the University of Luxembourg. Responsibility could also fall on tech platforms to take down misleading financial information from their sites, he added.
YouTube, TikTok and Meta say they ban content that contains harmful misinformation, deceptive practices and fraud. Meta, which owns Instagram, has barred influencers from promoting high-risk products, and YouTube said it warned viewers of “get-rich-quick” schemes.
There is plenty of good financial advice online too, and experts said there were benefits to sharing resources on financial literacy to a wider audience.
“Wall Street has become more accessible to investors without professional trading experience in recent years,” said Joseph Pacelli, an associate professor at Harvard Business School.
Many creators who work in or have a background in finance say that they, too, are tired of misinformation.
“There are folks out there who don’t have any sort of financial history; they just are good at marketing,” said Vivian Tu, who started Your Rich BFF, which shares personal finance tips to more than two million followers on TikTok. She still encourages people seeking tailored advice to hire a certified financial planner.
The backing of FTX from celebrities and venture capital firms persuaded Sunil Kavuri to put his life savings into the exchange in late 2021. “I didn’t move any money into the account until these guys all promoted it and basically said that it was safe,” said Mr. Kavuri, 44, also a former trader.
When FTX imploded overnight, Mr. Kavuri said he lost $2 million. “It was sickening,” he said. He believes that celebrities should not be promoting financial products they do not understand.
He joined class-action cases against several public figures who endorsed the exchange, including Tom Brady, Gisele Bündchen, Larry David and Shaquille O’Neal. Some defendants named in the suit have since settled the case, while others have argued for it to be dismissed.
Lawyers for Mr. Brady, Ms. Bündchen, Mr. David and Mr. O’Neal did not respond to a request for comment.
Certified financial advisers are beholden to rules that do not necessarily apply to content creators, said Landon Tan, a financial planner in Brooklyn. “Making false or misleading claims could end our careers,” he said, adding that the short-form nature of social media could skew some videos over others.
Authorities are trying to help consumers vet their feeds. Some have aimed campaigns at Gen Z investors, or added education on influencers to many events.
Ms. Ryan, the sales engineer from Wales, eventually hired a certified financial planner and took investing courses, many offered free by financial institutions. “I play it very safe now,” she said.
She has shared her experience more widely to combat the stigma of making financial mistakes, with a warning to others: “Be careful who you’re listening to.”
Kitty Bennett contributed research.
