Your Favorite Influencer Is Lying to You
Influencers are in the business of selling sponsorships and pocketing commissions – not giving you a free education. So why do you trust they’re telling you the truth?
If you’ve ever watched Mad Men you know that lies are at the heart of advertising. The Canadian philosopher G.A. Cohen puts it like this:
Advertisers may not care whether or not what they say is true, but they do care about what their audience is caused to believe, or, rather, more generally, about the thought-processes that they seek to induce in people.
With the advent of digital media, advertising began to wane. Fewer people today are exposed to full-page magazine ads or TV commercials than in decades past. But the change in consumer media habits did not reduce the demand for advertising completely. It simply took another form.
Instead of advertisers conjuring up clever campaigns in Madison Avenue board rooms, advertising now takes place on social media. One way or another, anyone who produces content for a living – whether that’s Joe Rogan or your favorite personal finance guru – earns the bulk of their revenue from advertisers.
This shift from print and TV advertising to influencer marketing simultaneously changed the nature of advertisements themselves. Rather than being something you just passively observe, advertisements are now promulgated by people you build relationships with.
The currency of advertising isn’t the lie you’re being asked to believe, it’s the trust you’re giving in exchange for it.
Today’s influencer economy is built on the trust that comes from an influencer’s relationship with their audience. Influencers can negotiate large fees from brands not just because of the size of their audiences but because they cling onto their every word.
But what happens when the lie is exposed? What do you do when you discover influencers are merely commoditizing your attention in order to sell it to the highest paying advertiser?
For the past few years I’ve been working in the personal finance sphere of the influencer economy. I started by building my own blog and trying to establish an audience on Instagram. When that didn’t pan out, I began working for other personal finance creators – bloggers, YouTubers, podcasters, and digital publishers.
In Dear Financial Influencers, Please Stop, I shed light on how financial influencers in particular are incentivized to provide you with misleading information about how to manage your money. Specifically, they package harmful products – like credit cards – around “educational” content:
The deeper I’ve gotten in the personal finance world — both as a writer and a freelancer for successful influencers — the more I’m realizing not everything is as it seems. My role isn’t to produce good work or share important information with readers.
It’s to use words to help convince you to buy a financial product — like a credit card.
Financial influencers are no different than any other influencer on social media. They have lucrative deals with brands like credit card companies and financial startups to help them sell their products.
There’s no money to be made from free education. The influencer’s goal isn’t to educate you. It’s to convince you to believe you’re being educated and get you to sign up for a new account of a product being sold by a company they’re working with.
There’s a major problem with this business model. Unlike banks, influencers aren’t regulated. While they’re supposed to disclose when they’re being compensated for promoting a product, that doesn’t always happen.
But what’s more concerning is the fact that few influencers actually use the products they’re selling you. They don’t actually know if something will help you get out of debt or help you build wealth. Because they don’t do any due diligence into the companies they’re working with, they don’t know all the risks that come with the advice they’re giving you.
A slew of scandals in recent years is starting to expose the real harm financial influencers are doing to their audiences. When the savings accounts and investment platforms they’re telling you to invest in aren’t legit, you not only lose your money you put yourself at risk of not being able to cover your expenses in the future.
This essay is going to dive into my own experience in the influencer economy to highlight how influencers are misleading you. Rather than providing sound financial advice, personal finance influencers are incentivized to offer “educational” content to promote the brands that sponsor them. As a result, they’ve created an imagined reality around what money is, shaping how you participate in the economy.
Whether it’s financial advice or information about nutrition, if you’re looking to influencers for guidance, they’re not incentivized to help you. The daily choices you make based on their advice can have serious repercussions down the road.
Before I dive in, I need to make a very important personal request.
I’m still working with some of the influencers referenced in this article. It’s not because I want to but because I have to.
While I aspire to earn a living from my own essay library here on Substack, I’m not there yet. For the time being, I have to continue freelance writing to pay my bills. And because my experience and connections are in the personal finance space, those are the people who are my clients right now.
While I’m trying to get out of the personal finance space and find new clients to work with, I haven’t been successful in doing so just yet.
What I am about to share in this essay could affect my current and future employability as a freelance writer.
Despite the risk, I feel a great moral and ethical obligation to share what I am about to share with you.
A lot of the financial products influencers are promoting are unregulated and untested. They are not designed to help you build wealth, they are designed to siphon account fees and monthly memberships from you.
We’re in a period of great economic disruption. There’s a very good chance you will lose your job and income in the near future. If you’re taking advice from unqualified influencers on social media and buying into the untested products they’re promoting, you’re exposing yourself to a tremendous amount of risk.
I can’t continue sitting on the sidelines, being a part of the lie, knowing where we’re heading.
If you’ve read my work and value the insights I provide, I would love your support. You can subscribe for $5/month and cancel at any time or become an annual subscriber for $35. Your support helps foster independent media which is so desperately needed right now.
-Amanda
The FTX scandal revealed that, for the right price, influencers are willing to sell any financial product to their audience.
In November 2022, the crypto world was rocked by the collapse of FTX. One of many unregulated crypto exchanges, FTX had an $8 billion hole on its books. After investors flocked to pull their money from the platform, it became evident the exchange was nothing more than a giant Ponzi scheme.
Its founder – Sam Bankman-Fried – is now behind bars. Some high-profile celebrities like Tom Brady have been sued for making appearances in FTX ads. And several YouTubers have been named in a $1 billion class action lawsuit for promoting the platform to their audiences without disclosing the fees they received from FTX to do so.