More social media stars in the Netherlands have shifted their focus to the world of forex trading, on platforms such as Instagram, Tik Tok and YouTube they share trading tips and lifestyle content and alleged success stories. Even behind the shiny veil of inspirational videos and lavish visuals, however, there is a worrying pattern. Most of these Dutch forex influencers have been marketing offshore brokers who do not fall under the jurisdiction of the Netherlands Authority for the Financial Markets (AFM). This is highly questionable on the part of transparency, protection of investors and even legality of such promotions.
The attractiveness of offshore brokers to influencers is not difficult: profitable affiliate programs. Such firms tend to make large commissions on referrals, and may even make a percentage of the trading losses or any deposits made by the new clients. Scammers take advantage of this by putting the idea of forex trading as a quick way to get rich by encouraging their followers to begin today by using individualized referral links. Since these brokers are located in a jurisdiction that is lightly regulated, they are in a position to provide greater leverage, bonuses and incentives that would not be available under the EU financial rule. Although these features may be appealing, they also put innocent traders at a very high risk.
Most of the movers and shakers selling such brokers do not reveal their financial relationship or alleviate the loss risks. Instead, their material usually features opulence vehicles, branded outfits, and laptops on the beach to support the notion of easy money. This marketing strategy gives unrealistic expectations of forex trading to young and inexperienced followers. It is made worse when these influencers reject the need to have regulation by positioning it as an unimportant barrier to financial freedom. This type of story destroys confidence in the valid financial institutions and negates the current work by the AFM to foster responsible trading.
This is a growing problem that the Dutch regulator has noticed. The AFM has on several occasions cautioned the influencers and the consumers on the risks associated with the unlicensed forex dealings, reminding the people that the offshore brokers were not regulated by the EU laws that protect investors. The implementation however is a challenge. Most of these platforms through which these brokers are advertised are international and the influencers themselves might be functioning across various jurisdictions. This complicates the process of holding promoters responsible or to stop the spread of misleading content on the social media networks.
With these regulatory challenges, awareness programs are now starting to take hold. Dutch media sources and financial education have begun highlighting fraudulent activities and viewers have been urged through financial education to check whether a forex broker is registered with the AFM or not by first opening an account. The believability of those influencers marketing offshore brokers without disclosure is being depleted over time as traders are increasingly becoming knowledgeable. Nevertheless, the temptation of the money remains and promotes and followers are drawn to it, carrying on the cycle.
Finally, the emergence of Dutch forex influencers who are encouraging offshore brokers is an indication of a larger world trend in the convergence of finance and social media. It highlights the ease with which persuasive marketing can be used to confuse financial education and exploitation. As long as regulators enhance their watchfulness, the only way to change the situation is probably by increasing digital literacy and making the audience more skeptical. To that point, the offshore forex broker and the collaborating interests of the influencers will continue to pose a threat to new traders enticed by the possibility of easy profits.
