Banks need active social media response to viral ‘free moneyʼ posts, misinformation

Banks need to be much more nimble in responding to viral social media posts spreading misinformation about their businesses. While many financial services firms monitor social media to check for reputational risk, only the more forward-thinking are using it to react to viral misinformation. 

For example, misinformation about how to get debt written off circulates online and some firms are combating this with their own social media campaigns. 

Operational risk experts told Compliance Corylated that firms should try to respond in real time to social media misinformation — such as the “free money” scams that have hit both Barclays and JP Morgan Chase. 

TikTok claims

During Barclaysʼ digital outage from January 31 to February 1, it saw customers withdrawing “free £250” at automated teller machines (ATMs). Misinformation posted on TikTok claimed that any cash withdrawn during the IT outage would not be noticed by the bank. A similar incident occurred in the US in August 2023, following an outage in JPMorgan Chase ATMs.

The Financial Conduct Authority (FCA) said: “Social media hype promising fast and free cash should be treated with caution. If it sounds too good to be true, it probably is. We urge consumers to verify the facts and speak to the financial firm involved before taking action.” 

While the regulator did not comment on the Barclays outage, it expects all firms to engage with it about major incidents, including IT outages. Firms must be in contact with the regulator during and after such events, and are expected to conduct a review of how they handled customer communications, as well as a full lessons-learned exercise.

This week the FCA said it was continuing to work with social media platforms to stop illegal financial endorsements being pushed to people; it also publishes a list of unauthorised firms and individuals on its website.

Barclays did not response to a request for comment.

Infinite money glitch lawsuits

While the ‘free money glitch’ has become an internet joke, online financial misinformation could damage consumer’s credit reports, and lead to fines, penalties, or imprisonment.

JP Morgan Chase’s technology glitch enabled customers to deposit cheques and withdraw far more than their available funds or the limit they would normally be allowed, which is considered a form of cheque fraud.

The bank has filed at least four lawsuits in Texas, Florida, and California against customers who withdrew funds fraudulently. In the Texas case, a “masked man” deposited a counterfeit cheque for $335,000 (£266,000) at an ATM, and once it had been deposited, immediately took out the money.

“Chase prides itself on its efforts to protect its customers against fraudsters, particularly in an environment where bank and wire fraud are increasingly more commonplace. While fraud methods have evolved over time, the core intent to exploit and deceive remains unchanged,” JPMorgan Chase said in its lawsuit.

Financial misinformation

As traditional financial education struggles to keep up, social media has stepped in to fill the financial literacy gap, blurring the lines between knowledgeable advisers and ‘finfluencers’, fraudsters and conspiracy theorists, often to the detriment of customers seeking advice.

According to a survey on December 18 by the FCA, 85% of young investors said platforms such as Instagram, TikTok, and YouTube were highly influential in their investment decisions, with 43% using these platforms as their primary research tool.

TikTok is ranked as the most popular platform for financial advice among Gen Z, with 46% of 18 to 24 years old using it, according to Barclays research conducted in July 2024. “You could be getting financial guidance from somebody you watch on TikTok or Instagram, and they may or may not be an expert in what they’re talking about,” Clare Francis, savings and investments director at Barclays, warned in the research.

From March 17, under the UK’s Online Safety Act, social media platforms will be required to have measures in place to ensure harmful and illegal content does not appear on their platforms in the UK.