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

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 eurozone do not have any stock market shares or any participation 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 have holdings in companies, funds, or government bonds.

Awakening investor interest is just one of Brussels' multiple objectives to boost 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 landscape is full of dangers – especially on the networks – 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. As a result of 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. Similarly, 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 matters linked to investment, followed by influencers in 29% of cases. "In the context of these trends, it is crucial that consumers are adequately protected against online malpractice that could lead them to make decisions that are not in their interest," the organization stresses.

Dark patterns

One of the most common oversights on the web are the so-called dark patterns, a series of deceptive design techniques aimed at manipulating users into acting unconsciously against their 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 presented 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 the country– 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 when purchasing a product, and using emotional or shaming language are just a few examples.

"The situation is bad. [...] Since 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 claims 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 the 'finfluencers'

The study also analyzes 15 financial influencers –also known as finfluencers– from Spain, Germany, the Czech Republic, and Hungary, a figure under the scrutiny of regulatory bodies. The conclusions are alarming: 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 cases where the influencer had a commercial relationship with a financial service provider, the legal disclaimer was difficult to detect.

As much as experts advise against turning to social media to decide how to invest, they believe it is fundamental to promote new laws to regulate these dubious practices. This is where the European digital fairness act appears, an initiative aimed at updating community legislation on consumer matters and adapting it to the new digital economy environment. The European Commission is expected to 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 web design," says Norwood. "It is the opportunity to prohibit bad practices [...] and influencer promotions when necessary," he summarizes.