In the first two months of 2021, the consecutive peaks of many cryptocurrencies and stocks created a worldwide fever. Potential investors immediately flocked to their favorite social media to learn more about personal finance, market trends, and how to get rich, including TikTok.
However, according to a new report commissioned by cryptocurrency firm Paxful, some of the information on these platforms does more harm than good.
After analyzing, collecting, and evaluating 1,212 posts from celebrities in the personal finance industry on TikTok, they found that 1 in 7 posts contains incorrect advice.
Content creators attract a lot of views by offering tons of investment advice. But the main purpose here is commercial.
This form is not new. Financial consultants and experts write articles about how people can make more money and attract new businesses. Those articles then will be reposted in many forms like books, e-books, podcasts. And many of us add to our income that way.
The story changes only when the content creators start giving and profiting from advice that is not subject to any formal obligations of liability if bad consequences occur. The UK’s Financial Conduct Authority has warned users about TikTok, and the US Securities and Exchange Commission has also issued a more general announcement about market volatility.
But the reality is that few young people pay attention to what mainstream regulators say. Meanwhile, 69% of TikTok users are aged 13-24, and this means that “StockTok” – the name of the personal-finance ecosystem on TikTok – is creating false first impressions of financial resources. personal empowerment for millions of young people worldwide.
TikTok: Strong ability to spread content
One of TikTok’s most powerful features is its ability to go viral in a very short amount of time. This superior ability allows misinformation to spread, and experts frequently criticize TikTok for abusing user growth while neglecting content moderation.
Vox has a collection of some notable StockTok videos, including one that asserts that setting up a business is tax-free. However, not all misleading content is so easily identifiable. According to Paxful, some characteristics of this type of misinformation include:
– Incentivize investment in certain stocks, virtual currencies, or assets with a guarantee of return
– Commit to an investment that will yield an unreasonably high-interest rate
– Give a specific investment milestone and ask users to invite relatives and friends to participate to receive more incentives
Currently, false content and financial scams are nothing new. A site like The Motley Fool has even existed and led this content market since 1993, adding countless satellite sites with compelling arguments.
They even claim to teach users how to sell a box of instant noodles for the price of a Tesla, but below this ‘magical’ article also includes a very clever legal disclaimer.
Similarly, when TikTokers give guarantees about assets over which we have little or no control, the first loser is the millions of users who are consuming information every day.
How to filter good content?
The explosion of both finance, technology, and social networking has led to information inflation, putting users in a difficult situation when it comes to choices. Therefore, before you decide to follow anyone on social media to learn about finances, consider the following factors:
Firstly, it is necessary to research the activity history and posts of the content creators. When reviewing someone’s product, program, or service, look closely at their interactions and history across multiple platforms. If it’s a new account established a few months ago, a person who liquidated fashion goods last month, became a financial expert next month, can you trust it?
Second, be wary of indicators that are too frivolous. These days, virtual follower counts are becoming the evaluation standards. But these parameters are easy to fake with some assistive tools. It means that a TikToker with a high number of followers, massive interaction maybe not an experienced or famous expert.
Third, good, educational content. Good content must equip users with the information needed to make clear, complete, and independent decisions instead of being one-sided.