The Financial Conduct Authority (FCA) has warned that investors are struggling to recognise manipulative marketing tactics used to promote investment opportunities, including pressure techniques designed to create urgency and fear of missing out.
New research commissioned by the regulator found that people aged 18 to 40 were almost twice as likely to recognise pressure tactics in horror films as they were when encountering similar techniques in investment promotions.
The survey of 666 (sic) UK adults who either hold investments or are considering investing found that 65% recognised “this is your only chance” as a warning sign in a horror film. However, when presented with a “last chance to buy” investment opportunity, only 36% said it would make them more cautious, while 37% said they would feel pressured to act quickly.
The findings highlight how investment promotions can use familiar marketing techniques to influence decisions, particularly when combined with claims of exclusivity, strong performance and social endorsement – resulting in fraudulent investment schemes appearing more credible.
“Many people can spot a horror movie trap a mile off, but this survey suggests they’re far less likely to recognise the same tactics when they’re used to influence investment decisions,” said Lucy Castledine, director of consumer investments at the FCA, emphasising the importance of potential investors doing their own research rather than falling prey to hype, urgency and the fear of missing out, commonly known as FOMO.
Other factors noted in the FCA’s research included the use of visual cues and novelty in investment marketing, such as a rising investment price graph, or a product marketed as “groundbreaking new”. Social proof was another area of concern, such as excitement among friends or in group chats about an investment.