In a series of TikTok videos that went viral earlier this month, Patricia Milan, the user behind the account, Business Women University, boasted about securing $150,000 in cash to buy an Airbnb unit by maxing out her credit cards. The plan, as she explained to viewers, was to pay off her debt using the proceeds from her rental. A second video gave advice on how to obtain high credit card limits by creating a series of circular transactions within her own companies—which is, in fact, illegal in many jurisdictions.
Milan did not respond to Fast Company’s request for comment, made through several of her social media accounts. But financial experts have thrown cold water on both strategies put forward by the entrepreneur, suggesting it was far from sound financial advice. And, more troublingly, Milan is far from the only influencer to tout unsound financial principles.
That conceit has proven a pretty alluring promise on TikTok, where TikTok videos tagged with the hashtag #wealth have been viewed 55 million times in the last month, according to the platform. Those tagged with #millionaire have been seen 69 million times in the last 30 days, while #financialfreedom videos have been watched another 20 million times. There’s just one problem: A recent study from the stock research platform WallStreetZen found that 63% of stock-related videos on TikTok were misleading. Worse yet, 95% do not contain any disclaimers about investment risks.
“If people take this advice, you know, there’s no one they can look to to blame,” says Christine Kieffer, senior director of investor education at the Financial Industry Regulatory Authority (FINRA), an independent nonprofit representing brokerage firms and exchange markets. “The main thing is, do not go to YouTube or TikTok. Talk to a real person.”
Kieffer believes many people’s unwillingness to disclose financial concerns or problems also plays a role in financial advice videos’ popularity, as there’s “some degree of information that people can gather without feeling like they’re disclosing their own personal information.”
Some of the more questionable TikTok guidance includes channeling all your household expenditure through an S-corp. to avoid taxes, taking a family vacation every year through your business, and hiring your children on salaries of $12,000 to help them be tax-free. “It feels really shitty to do it, but it’s kind of how you avoid paying taxes,” says the TikTok user Julia Hurley in one video. However, the IRS’s own website suggests that S-corps and their shareholders may be liable for some taxes, and the fraudulent use of S-corps to avoid taxes that otherwise ought to be paid have been under the IRS’s microscope for at least 10 years now. “It’s a very common money-laundering scheme,” adds Chris Whalen, a certified public accountant based in New Jersey.
Part of the problem, says Whalen, is that detailed, accurate tax advice is “much too complex for a 60-second video.” He fears for the impact of those who are offering financial tips without real expertise, who are placed alongside and presented as equivalent to real experts. “Some people are giving advice as if it’s legit, and it’s going to cause people to go to jail,” he says. And considering that, according to research, three in four Gen Zers rely on platforms like TikTok and YouTube for financial education, this could be a problem on a massive scale.
Whalen would like to see TikTok implement more rigorous fact-checking processes when it comes to presenting financial information—but he also acknowledges this is more user error than anything else.
TikTok declined to comment on the record for this story, though it pointed to data showing 91.6% of videos violating its fraud and scams community guidelines were removed between July and September 2023.
One of the issues that makes advice on social media so challenging, says FINRA’s Kieffer, is that platforms are designed to elicit emotions and provoke immediate responses—neither of which are helpful reactions when it comes to financial decisions. “It’s important that individuals slow down their decision-making and realize their emotions might be taking over; or they might just be wanting to solve a problem quickly, and the internet and social media have provided some opportunity strategy for them,” she says.
Kieffer advises taking a breath before following social media advice, and checking vetted resources, such as those offered by FINRA. And it’s definitely worth remembering that when it comes to finance, unlike other aspects of our lives, the maxim that social media can amplify and exaggerate has never been truer.
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