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China to tighten control over ads of Internet finance

China plans to launch a probe into false advertising of Internet finance services, State Administration for Industry and Commerce said on its website, part of measures to curb the rising risks of financial frauds via cyberspace that have been exposed since late 2015.

The probe would be held through November, the notice said, keeping strict management controls over the advertisement of Internet finance companies such as online peer-to-peer lenders, and punishing on big misconducts to alert the risks.

The probe followed by a series of crackdown on the booming online lending sector, as local branches of industry and commerce regulatory body banned the registration from applicants with finance-related names or business since mid-April, and the central bank argued for legislations to combat illegal fundraising activities through the Internet last month.

"The advertisement probe will definitely give a hit on online lenders in terms of reputation, website volumes and the number of customers. Cost will surge for those platforms to grab new clients this year," said Ma Jun, chief research officer at Shanghai Ying Can Investment Management Consulting Co.

More than one-third of about 4,000 existed online lenders faced fraud or difficulties for funds to be withdrawn by April, according to Online Lending House, the portal site that track the sector, with 75 platforms halted service last month alone.

False or exaggerated advertising was one to blame in fostering frauds bigger and misleading investors on online lenders. The most notorious case could be Ezubao, which put in more than a billion yuan (US$153.8 million) promoting itself on media including the state-backed central television broadcast. The Ponzi scheme raised over 58.1 billion yuan from some 901,294 investors, and was shut down by the police in December.



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