Banking expert Josie Clapham, Chief Customer Officer at TSB, has issued a warning to Brits about an online mistake that is costing people an average of around £700. New data reveals that over half of people who acted on financial advice seen on social media in the past year have lost money as a result.
The statistics show that 32% of people have acted on advice read online, with 56% of those people losing money at an average of £700 each. Ms Clapham warned that acting on "unverified and misleading content" can come at a "real cost".
Regret and the risk of scams
"And it's not just about losing money," she added. "Almost 6 in 10 (59%) of those who acted on financial advice they saw on social media regretted doing so. While there is clearly some good content out there, it really shows the important of verifying content and advice with trusted, official sources, before you act."
The expert reiterated that it is "vital" not to act on unverified advice when making decisions on mortgages, investments and savings. She urges people not to rely on social media but to check the information against a trusted source such as a bank, broker, or adviser.
Ms Clapham also noted the risk of "get rich quick" claims or investment opportunities that appear online, which can sometimes turn out to be a scam. "In the worst cases, what looks like an investment opportunity online can turn out to be a scam," she explained. "UK Finance figures show that people lose more than £3,000 on average per case to investment fraud. Before investing, sharing personal information or transferring money, make sure the firm or individual you're dealing with is genuine and don't rush into making a decision you might later regret."
AI-generated content and psychological pressure
As well as social media, an increasing number of Brits are using AI to learn about financial topics. The data shows that 25% of people have used AI for advice, rising to 43% of 25 to 34-year-olds.
Ms Clapham said: "Unfortunately, fraudsters can easily create AI-generated content not only to mislead you, but to encourage you to share personal information, invest or transfer money – potentially leaving you out of pocket; so tread carefully and check against trusted sources before acting on the content you're seeing online."
As everyone's financial circumstances are different, advice written online can be misleading as it is unlikely to be tailored specifically for the reader. Some Brits are feeling pressure to improve their finances, which makes them more likely to follow unverified advice online.
The expert continued: "Social media content can have a psychological impact on your relationship with money. Seeing someone talk about buying their first home, growing their investments or hitting a savings goal can make you think about how your finances compare. Almost half (49%) of people surveyed said financial content had made them feel pressured to improve their finances, while a third (33%) had considered changing their financial goals or career aspirations because of content they had seen online."
Check before you act
Above all, Ms Clapham said it is crucial to "always check before you act". She added that people should also make sure what they've seen is "trustworthy" and can be "verified".
The expert explained: "Your bank's website, local branch or video banking can be useful places to find reliable information and receive advice on a range of financial issues. And if you're struggling with your finances, remember there are trusted places you can turn to for help. Speak to your bank or organisations such as StepChange or Citizens Advice who can offer support and guidance."
