Brussels wants you to invest more, but the networks are full of frauds

BarcelonaThe European Commission, concerned about the European Union's loss of competitiveness compared to China and the United States, has long been repeating a mantra to reverse the situation: EU citizens need to invest more and have the means to do so.

According to data collected by the European Central Bank (ECB), 80% of households in the euro area do not own any stocks or shares in investment funds: a pool of nearly 10 trillion euros in savings—the equivalent of one-third of all financial assets of families on the Old Continent—deposited in bank accounts that offer low returns. In the United States, by contrast, 65% of families own shares in companies, funds, or government bonds.

Awakening the appetite of investors is just one of Brussels' multiple goals to promote so-called strategic autonomy. For the European Commission, channeling all these resources toward productive investments would allow for supporting the real economy. Despite the good intentions, the current scenario is full of dangers—especially on the web—that can lead to significant economic harm, especially for vulnerable consumers.

A study published this week by the NGO Finance Watch, based in the community capital, warns of all these dangers. Due to all the recent digitalization processes, the percentage of EU consumers using online banking services has grown from 56% to 72% between the years 2014 and 2024. Likewise, searching for information and financial advice on the internet has become more common, particularly among young people. In France, for example, 41% of citizens between 18 and 24 years old cited social media as their main source of information on investment-related issues, followed by influencers in 29% of cases. "In the context of these trends, it is crucial that consumers are adequately protected against online malpractices that could lead them to make decisions that are not in their interest," the organization underlines.

Dark patterns

One of the most common forms of negligence on the web are the so-called 'dark patterns' (dark patterns), a series of deceptive design techniques aimed at manipulating users into acting unconsciously against their own will. The report mentions an analysis published by the European Commission in 2022 which concluded that 97% of the most popular applications in the EU featured at least one dark pattern.

The Finance Watch study, in fact, has examined a total of 24 financial institutions—including traditional banks, neobanks, and trading platforms, some in Spain—and has identified numerous highly questionable techniques. Giving more prominence to certain options when consumers are asked to make a choice, creating a false sense of urgency to pressure users into buying a product, or using emotional or shame-inducing language are just a few examples.

"The situation is bad. [...] Given that we operate in a risky environment, it is a problem that must be addressed with urgency," points out the author of the report, Peter Norwood, in statements to ARA. While the expert highlights the importance of having good financial literacy, he acknowledges that the tactics used on online portals are so complex that they are difficult to detect.

The figure of 'finfluencers'

The study also analyzes 15 financial influencers—also known as finfluencers— from Spain, Germany, the Czech Republic and Hungary, a figure under the microscope of regulatory bodies. The conclusions are alarming: of the total, none of them possessed a financial advisory license or any other regulated credential. At the same time, nearly 60% did not adequately disclose the risks associated with the investment products they recommended. In parallel, in at least 30% of the cases in which the influencer had a commercial relationship with a financial service provider, the legal notice was difficult to detect.

As much as experts advise against turning to social media to decide how to invest, they believe it is essential to promote new laws to regulate these dubious practices. This is where the European digital equity law appears (Digital Fairness Act, in English), an initiative aimed at updating community legislation on consumer affairs and adapting it to the new digital economy environment. It is expected that the European Commission will present the proposal by the end of this year. "It is a very important text because it will introduce binding rules that will specifically address dark patterns and website design," maintains Norwood. "It is the opportunity to prohibit bad practices [...] and influencer promotions when necessary," he summarizes.