An increasing number of Japanese consumers are falling victim to social media investment fraud, where scammers impersonate celebrities in schemes to swindle money.
The companies operating the social media platforms being used for such scams should be screening and stopping these ads, but their response has been clearly insufficient.
The Big Tech companies that manage these platforms need to take urgent steps to enhance the policing of investment ads.
According to the National Police Agency, investment scams through social media discovered in Japan between January and March alone number 1,700 cases, with total damages exceeding 20 billion yen ($127.2 million).
Many of these scams involve directing users from ads to LINE, a popular messaging app offering social networking capabilities, among other features. Cases involving losses in the hundreds of millions of yen have been occurring in various places.
These are malicious scams that use the unauthorized images and names of well-known public figures to falsely suggest that these celebrities endorse a financial product or investment opportunity, misleading potential investors.
The operators of social media platforms have a duty to reject these ads through rigorous screening.
In an April statement, Meta Platforms Inc., which operates Facebook and Instagram, where numerous such fraudulent ads have been found, emphasized its policies prohibit fraudulent and deceptive ads that misuse celebrities images or impersonate them to mislead people.
However, the company also pointed out the challenges posed by the vast number of ads worldwide andsaid that a societal approach is crucial, drawing criticism for lacking a sense of responsibility.
The statement mentioned the risk that negative experiences and fraudulent content can drive users and advertisers away, stressing that eliminating fraudulent ads is essential for Metas business.
However, switching from one platform that dominates the market to another minor one is difficult, reducing the disciplinary influence that consumers can exert on the operators behavior through their choices.
It is unacceptable for these tech giants, which earn enormous revenues from a vast number of ads, to become complacent due to their monopolistic advantages and downplay the harmful effects of the prevalence of fraudulent ads.
Meta, along with other Big Tech companies operating social media platforms, should recognize the gravity of their responsibility and spare no expense in fundamentally strengthening their measures to counter fraud.
In response to the operators delayed actions, the government is also considering measures to tackle this problem.
A panel of experts advising the Ministry of Internal Affairs and Communications on the matter is discussing steps such as requiring platform operators to establish and publish standards for pre-screening ads and halting them if they are found fraudulent after publication.
Increasing the transparency of screening should prompt operators to respond more effectively to the problem. However, regulating ads also concerns freedom of expression. It is crucial to proceed carefully in debating regulatory measures to ensure that legitimate expression is not restricted.
Enhancing consumers knowledge and judgment regarding investment ads is also important to prevent damage. Investments that offer high returns inevitably come with high risks, and investment products and services that promise huge, sure-fire returns and seem too good to be true should be suspected of fraud.
The government has pledged to bolster financial education at schools as it has expanded NISA, or the Nippon Individual Savings Account, a government tax-free stock investment program for individual investors.
However, the government should prioritize ensuring that consumers gain basic knowledge to protect themselves against crimes over advising them on asset formation.
--The Asahi Shimbun, June 14
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