Tag Archives : stock promotion


Facebook replies

No position in FB.

More than 3 months after my initial email to the Facebook Ads team, I received this enlightening reply today:

On Tue, Sep 2, 2014 at 12:17 AM, Facebook Ads wrote:

Hi Jacob,

No,we still follow segregated user advertisement

Thanks,

Kash
Facebook Ads Team
Facebook

—–Original Message—–
Subject: Report an Ad

Have you read the above information?: Yes, let’s get started
Does the ad include your intellectual property?: No
Are you seeing ads at the top, bottom or left of any page?: No
Have you noticed ads or stories produced from your Facebook account that you did not create?: No
Are you reporting a post or story from a Facebook page?: No
Where did you see this ad?: Other
What best describes the ad you are reporting?: Other
Do you have a screenshot of the ad you are reporting?: Yes
Please describe the ad you are reporting:

Dear Facebook,

Facebook has lately been displaying a large number of ads from paid stock promoters. I am likely targeted for these because I own and operate a registered investment adviser.

Paid stock promotion is an unethical, deceptive, and borderline illegal practice. Promoters typically receive compensation for publicizing only the positive attributes of fly-by-night companies, and they often sell shares while recommending investors make purchases. The practice has recently been the subject of a number of SEC enforcement actions, and it can lea to significant losses for unsuspecting or unsophisticated investors. There is the potential for significant harm and abuse to result from Facebook’s acceptance of advertiser funds for stock promotion.

Please immediately discontinue your practice of accepting ads from paid stock promoters, such as the ones shown in the screenshots attached. These ads potentially violate several of your own published guidelines:

1. Ads for regulated goods and services (e.g. alcohol and gambling), must abide by all applicable laws, regulations, and industry codes.

Paid stock promoters are required by law to provide extensive disclaimers in their advertising. These are not prominent in the Facebook ads.

2. Advertisers must ensure that their ads comply with all applicable laws, regulations and guidelines. All claims in ads must be adequately substantiated. Ads must not offend users. Ads and any offers promoted within ads must not be false, deceptive or misleading or contain spam.

Some ads may contravene SEC guidelines. Claims about the promoted stocks are exaggerated and misleading. As an investment adviser, I am offended by this practice. From my perspective, an unsolicited investment “tip” from a paid advertiser is spam. Claims in the linked advertisements are at the very least questionable, if not outright false.

3. Ads may not promote a business model or practice that is deemed by Facebook in its sole discretion to be unacceptable or contrary to Facebook’s overall advertising philosophy or to any applicable law, including but not limited to multi-level marketing schemes, or advertisements for scams.

Penny stock promotion is at least as objectionable as multi-level marketing.

4. Ads may not promote or facilitate the sale or consumption of illegal or recreational drugs, tobacco products, or drug or tobacco paraphernalia.

At least one ad campaign focuses on “marijuana stocks” and promotes the purchase of a purported cannabis producer. The linked website is http://mjstockreport.com/pdf_report/GBLXP1.html

I would very much appreciate a response letting me know whether you have decided to discontinue this practice.

Best,
Jacob Ma-Weaver, CFA

—–End Original Message—–

Well, there you have it. Acknowledgement that Facebook continues to support paid stock promotion.


Is Facebook over-monetizing mobile ads? 3

Disclosure: No positions in FB or any of the penny stock scams mentioned here.

Facebook should really stop accepting advertising dollars from paid stock promoters.

Facebook’s ability to target ads to its users’ interests is the key reason for its success as an advertising platform, although lately it seems like the company is overdoing it. In its relentless effort to tie advertisements to whatever information a user makes available, some mistakes are inevitable — I haven’t played the trumpet in years, but I still see ads for valve oil — but for the most part the targeting is uncanny. Unsurprisingly, as an investment adviser I see a lot of ads related to investing on my personal Facebook page. Some of them stem from retargeting based on websites I have visited (no doubt Covestor would rather not pay for my impressions, a separate weakness of retargeting), yet for the most part Facebook has done an admirable job of intuiting my interest in investing from relatively passive, infrequent use of the platform.


I am writing this post because rather than just run-of-the-mill mutual fund solicitations and ads from research firms, Facebook has increasingly been showing me ads from paid stock promoters. In my opinion, paid stock promotion is unethical, dangerous, and entirely inappropriate for the general public on a social network. Promoters target unsophisticated retail investors with insinuations of easy riches and extraordinary growth prospects in questionable businesses operating on legal fringes, such as marijuana dispensing. Needless to say, many of the investments being highlighted in this way are penny stocks with little or no intrinsic value, potentially manipulated securities, or pump-and-dump schemes designed to separate the uninformed from their money. You should be extremely skeptical of any investment that is the subject of paid promotion. It is a dark side of the stock market, and I expect better from a platform like Facebook than to enable it.

Stock promotion is already borderline illegal and the subject of SEC concerns. Given format constraints, ads on a mobile platform are particularly unlikely to conform with the stringent legal disclaimers promoters are required to include in their ads. Stock promotion also contravenes several of Facebook’s own advertising guidelines.1 I told them as much on their abuse reporting form, but the ads have continued. So, this is my attempt to publicize the practice and encourage Facebook to end it.

The ads excerpted in this post were shown intermittently on a mobile device between May and August of this year.


GrowBLOX is purportedly in the marijuana cultivation business, an “exploding” and “booming” industry. The promoter questionably claims to have performed weeks of in-depth analysis.


This misleading chart does not specify the company in question (not GBLX), and the blurry footnote reads, amusingly, “these calculations may not be 100% accurate but are close.”

 


Ignoring the Priceline canard, does nearly illegible text at the bottom of a mobile ad conform to disclosure rules?


Other ads in the promotion, such as this sponsored press release, do not include any disclaimer at all.

 


Contrast GBLX above with this disclaimer on another campaign. At least the promoter is relatively upfront.


Some viewers of ads make a valiant effort to push back against stock promotion, although many comments (paid?) cheer it on.

 


This ad contains a misstatement of fact. According to FactSet, there are 2,849 companies trading on the OTC BB that had positive net income in their most recent reporting period.


It continues with a thinly veiled recommendation to purchase securities. The background information does not disclose whether this specific report was paid for.

In short, not only are stock promoters advertising on Facebook, but several of the ads fail to properly disclose the authors’ interests in the subject securities or receipt of compensation from the subject companies. At a minimum, Facebook should stop running these ads, which appear to violate the law. Better yet, Facebook should stop enabling the distasteful practice of stock promotion altogether.


1 Stock promotion, in particular of marijuana companies, appears to violate several of Facebook’s own advertising guidelines. Facebook gives itself broad discretion not to run ads that violate its overall philosophy. Other than its desire to show growth in mobile advertising revenues, I have trouble thinking of any reason why Facebook would not exercise its discretion here. Provisions violated include:

  • Ads for regulated goods and services (e.g. alcohol and gambling), must abide by all applicable laws, regulations, and industry codes.
  • Advertisers must ensure that their ads comply with all applicable laws, regulations and guidelines.
  • All claims in ads must be adequately substantiated.
  • Ads must not offend users. (Is it enough that I’m offended?)
  • Ads and any offers promoted within ads must not be false, deceptive or misleading or contain spam.
  • Ads must not contain or promote illegal products or services.
  • Ads may not promote or facilitate the sale or consumption of illegal or recreational drugs, tobacco products, or drug or tobacco paraphernalia.
  • Ads may not promote a business model or practice that is deemed by Facebook in its sole discretion to be unacceptable or contrary to Facebook’s overall advertising philosophy or to any applicable law, including but not limited to multi-level marketing schemes, or advertisements for scams.
  • Ads may not constitute, facilitate or promote illegal activity.