The Australian Securities and Investments Commission (ASIC) has issued warning notices to four finance influencers, also known as "finfluencers".
They are suspected of providing unlicensed financial advice, like promoting claims of guaranteed returns, which could also be misleading or deceptive.
As younger Australians increasingly turn to social media for personal finance advice, the watchdog is attempting to crack down on bad online actors before anyone gets hurt.
"If someone on social media is promising easy money or guaranteed returns, there is a real risk they're breaking the law, and you could be the one who loses money," ASIC Commissioner Alan Kirkland said.
"What people see online is shaped by algorithms designed to drive clicks and engagement, rather than promoting accurate information.
"This means consumers are more exposed to biased or misleading content."
While the influencers have not been named, the commission's surveillance has focused on those targeting Australian investors and discussing products like leveraged derivatives, shares and exchange-traded funds.
The majority of Australians between the ages of 18 and 28 rely on social media for financial information, with more than half saying they somewhat or completely trust the advice from the platforms or their influencers, according to Moneysmart research.
ASIC has urged young Australians to study social media influencers and compare their advice with trusted, evidence-based sources.
They should also check whether a person or business is licensed or authorised before acting on their financial information through the ASIC Professional Registers Search.
Finance influencers must hold an Australian Financial Services license, or operate as a representative of someone with that license, if they want to legally provide advice on financial products.
Those who aren't licensed or authorised could be imprisoned for up to five years or face million-dollar fines.
In December 2022, the Federal Court found social media influencer Tyson Robert Scholz had provided financial product advice about share trading on the ASX without a licence.
He had delivered training courses and seminars about trading in ASX-listed securities and recommended share purchases, and charged up to $1500 for subscriptions to different levels of share trading training.
Scholz was banned from maintaining a financial services business in Australia and ordered to pay $450,000 to ASIC for the costs of the proceedings.
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