The trap of influencer trading for neighborhood youth

Article originally published on October 25, 2021.

Update of October 27: after publication of our survey, one of the cited influencers reacted via social networks on his Instagram account, we have integrated his answers, for the sake of transparency.

“200 euros a day, without having to do anything. It is true that it was a dream. » Brahim *, 34 years old and from the Paris region, lost 2,000 euros, which he had to spend on family holidays, following the advice of Marc Blata, a French influencer from reality TV, living in Dubai and who makes the promotion of online trading.

It all starts with an enticing promise. On his Snapchat account, followed by 1.6 million subscribers, the person boasts of a “good money plan”, with the key to a daily gain of several hundred euros. It is a question of playing the trader of the Web, in other words of speculating on financial assets (foreign currencies and cryptocurrencies) via dedicated apps.

“It seemed so easy. We have nothing to do, just take the signals at the right time., recalls Brahim. He didn’t have to wait long before becoming disillusioned: SFor the first week, I was quite satisfied, I had taken some money. But from the second week, it was the tumble. And then you drown in frustration, you keep betting until you lose everything”describes Seine-et-Marnais.

Marc Blata, Laurent Billionaire, Milla Jasmine: so many reality TV celebrities who, between two product placements for online stores or cosmetics, encourage their subscribers to engage in online trading. Galvanized by the promise of easy money, many have lost big by following the ill-advised investment advice of their favorite influencers. A disturbing phenomenon which, by means of a well-rehearsed discourse, mainly attracts young people from the suburbs and vulnerable people.

Lhe first time I heard him talk about online trading was on his Snapchat account.

Web applications that offer individuals to invest in financial markets are not new. On the other hand, their promotion by reality TV celebrities, whose notoriety is great among working-class youth in particular, is much more recent. By showing off their golden daily life, made up of luxurious villas in Dubai and high-end cars, influencers maintain the illusion that this dream life is within reach, thanks to a smartphone and a few well-considered investments.

Brahim recalls how he was baited by Marc Blata: Lhe first time I heard him talk about online trading was on his Snapchat account. He explains that it works, and shows screenshots, testimonials of people who have followed his advice and made a lot of money. »

These pseudo-proofs are the heart of a very elaborate speech, inspired by teleshopping sales techniques, and which aims to present online trading as a unique opportunity not to be missed. With great support from “You’ll regret it all your life if you don’t take this opportunity now”the sense of urgency thus generated “encourages us to go headlong”explains Brahim.

Another essential aspect of influencer sales techniques is to rely on the bond of trust they create with their subscribers. “Marc is very smart”judge Yassine*, another victim, who lost 500 euros by buying foreign currency. “He pretends to be a guy from the suburbs, who started from nothing, who struggled in life. We identify with him. In his speech, you get the impression that he wants to help you, that he is reaching out to you. We tell ourselves that he wants our best and that he will not fool us. »

I thinks that he uses the fact that he is a Muslim to seduce young people from the suburbs, it is something that he puts forward a lot.

To finish convincing the most reluctant, especially people of the Muslim faith who doubt the religious legality of online trading, Marc Blata offers an “Islamic account” option: “It is an option that allows you to generate no interest and in any casewe only invest in things that are lawful in Islam, namely currencies”, he says in one of his many videos. Yassine was partly seduced by his arguments: I thinks that he uses the fact that he is a Muslim to seduce young people from the suburbs, it is something that he puts forward a lot. Leople trust each other a lot in the Muslim community when it comes to money. »

Marc Blata, whose reputation is largely based on his past commitment to denounce “the placement of dangerous products” promoted by other influencers, plays the franchise card to the hilt. He acknowledges receiving a commission on the earnings of his subscribers and each time his Internet link is used to register on the trading platform. “It’s a system win-win »does he sell to his followers (those who follow him). “He admits to taking money from us, but as long as we also earn money, we are ready to follow him”says Brahim.

The more you lose, the more money the influencer makes and the more money the trading site makes.

This remuneration per affiliate link is common in the world of e-commerce according to Philippe Miller, journalist for Warning Trading, an online media specializing in cybercrime. “The business model of influencers is not really to make money with the method they sell to you. Their business model is to bring customers to trading sites that will in exchange pay them back commissions. »

Sometimes, the influencer even gets rich at the expense of his subscriber. “In some cases, they will even receive a share of the sums that are lost by the people they have recruitedare for the trading site. The more you lose, the more money the influencer makes and the more money the trading site makes”, analyzes Philippe Miller. Asked, Marc Blata has not answered our questions to date.

Like in the casino

Reality TV celebrities share their investment advice via Telegram messaging. Signing up to the online trading platform is the key to entering their closed Telegram group. Among the financial assets on which it is proposed to speculate, there are cryptocurrencies and foreign currencies on the market called Forex. “Forex is the foreign exchange market, it is where currencies from all over the world are exchanged.explains Philippe Miller. When you trade on currencies, you make bets on the evolution of their value, upwards or downwards, like in the casino. »

We do not improvise trading overnight.

Very volatile financial products, whose fluctuations are very difficult to anticipate. For a beginner trader, betting on the evolution of the price of a currency is almost a matter of chance. And it’s often the trading app that wins. “You can win 100 euros on a miracle, but that never happens. In truth, you mostly lose”comments Yassine.

“You don’t improvise yourself as a trader overnight”, adds Brahim. Specifically, on the question of competence, influencers are quite unable to provide proof of a qualification or experience in finance.

Lhe numbers speak for themselves, as 9 out of 10 trading app customers are losers.

The Financial Markets Authority (AMF), the French stock market policeman, has sounded the alarm on these practices which it considers dangerous. The institution is concerned about the growing number of French people venturing into the markets, hoping to get rich, only to lose big.

Director of Investor Relations at the AMF, Claire Castanet warns: Lhe numbers speak for themselves, as 9 out of 10 trading app customers are losers. And we can clearly see that it affects people who have believed in illusory promises and who end up losing either the money of a lifetime or, for young people, the money they need to finance their studies. » A risk that is often minimized, or even not mentioned at all by influencers when they advertise trading applications.

Although individuals cheated by online trading are in the majority, there are a few exceptions. Latifa, 32, is one of them. She has been trading since 2017 and claims to earn between 600 and 1,200 euros per month. But not so easily: “I don’t see trading as easy money. Because it required me to spend time there, an hour on Sundays or in the evening. For me, you can make money by trading, but it involves training. »

A difficult regulation

Between platforms not always authorized to operate in France and the promotion by influencers of financial services for which advertising is prohibited, the regulation of online trading is proving tricky for the authorities.

First, the applications to which reality TV celebrities direct their subscribers are often backed by groups with several dozen other trading applications. These companies are mainly domiciled in tax havens, and escape any regulation by the French and European authorities. This is particularly the case with IronFX, a site promoted by influencer Laurent Billionaire.

Other platforms are even blacklisted by the Autorité des marchés financiers for their illegal practices, and are prohibited from offering their services to French customers.

Then, advertising for financial products is very regulated by law and is often even prohibited. This does not prevent these influencers from promoting it. Since December 2016, the Sapin 2 law has regulated advertising on financial products: in particular, it prohibits the promotion of the most complex products, such as crypto-currency or Forex derivatives.

I wonder why influencers who promote trading all live
to Dubai.

The reality star’s favorite promotional tool, Snapchat, is now taking the subject seriously. In its usage policy, the social network recalls that it is prohibited to advertise financial products. At the end of September, the accounts of Laurent Billionaire and his wife Jazz were suspended by Snapchat, due to violations of the internal rules of the social network.

Trading platforms do not seem to be the only ones operating far from the control of French regulators. All influencers touting “easy money” of trading have moved to Dubai. Not the most renowned of the emirates for its international judicial cooperation. “I wonder why the influencers who promote trading all live in Dubai. My opinion is that they flee the French state because they know that their practices are illegal”, tance Yassine who claims to have definitely finished with trading. But what about the others to whom financial independence has been sold?

*Names have been changed to preserve anonymity.

Emilie Duhamel and Yunnes Abzouz

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