China’s top financial watchdog has admonished the public to be cautious about embracing celebrity-endorsed financial products, following years of dubious lenders going under and taking customers’ funds with them.
The China Banking and Insurance Regulatory Commission said Thursday that financial products and services — including peer-to-peer (P2P) lending platforms, insurance companies, and banking services — advertised by celebrities could be risky and result in losses for buyers. The commission added that individuals should always seek professional information regarding such investments.
“If the ambassador is not able to explain the product they’re endorsing or doesn’t understand its risks, they could mislead the public,” the statement said.
China’s peer-to-peer lending platforms were particularly popular alternatives to mainstream financial services during their boom in 2017. However, over a span of less than two months in 2018, hundreds closed due to issues ranging from defaulting customers to runaway bosses, resulting in massive losses for their clients. Then last November, authorities banned such platforms entirely.
Finance Review, a media account on social app WeChat that specializes in financial information, reported Thursday that at least 18 financial products with celebrity endorsements have folded since 2015.
In February, television host Du Haitao was sued after the P2P lending platform he had endorsed shut down. However, Du claimed he was never the company’s brand ambassador, and had merely signed on for one advertisement in 2018.
Responding to the problem of misleading celebrity endorsements earlier this year, the financial conciliation center at Beijing’s Chaoyang District court urged all brand ambassadors to pay close attention to the financial products and services they advertise.
Chen Yinjiang, deputy secretary-general of the China Consumer Protection Law Society, a government-affiliated institution in Beijing, told Sixth Tone that celebrities should not only consider payouts when agreeing to endorse financial services, but also understand the messaging they’re relaying to the public.
“If ambassadors fail to take responsibility for inspecting financial products and give misleading information, they have a compelling obligation to the consumer’s loss,” he said.
On microblogging site Weibo, many angry users who have fallen prey to short-lived financial services platforms are speaking out, accusing celebrity brand ambassadors of lying to them. Under actor Hu Jun’s Weibo post sharing a trailer for an upcoming movie, a user slammed him for losses incurred when a P2P lending platform Hu had endorsed collapsed.
“How dare you still share new posts on Weibo?” one user commented, while another labeled him a “swindler.”
According to China’s Advertising Law, brand ambassadors are forbidden from endorsing products and services they haven’t used, and are required to vet companies before signing contracts.
In 2019, major financial institutions including the China Banking and Insurance Regulatory Commission and People’s Bank of China released new regulations banning companies from engaging in overt profit-making schemes to lure clients. However, many private and even state-owned companies are still using celebrities to peddle their products and services.
On entertainment platforms like Bilibili, large firms such as China Merchants Bank and Ping An Bank have even used flashy videos featuring young women to attract customers.
Editor: Bibek Bhandari.
(Header image: Film director Xu Zheng appears in an advertisement for JD.com’s dedicated finance app, Shanghai, 2020. Wang Gang/People Visual)