Social media networks are being extensively abused by scammers who use the networks to advertise fake products and investment schemes and conduct romance scams. According to the Federal Trade Commission (FTC), at least $2.7 billion has been lost to scams that originated on social media since 2021; however, the true losses are likely to be many orders of magnitude higher, since the majority of victims of social media scams do not file complaints. The FTC says one in four people who reported losses to fraud said the scam originated on social media.
Scammers can easily set up fake personas on social media sites and use them to conduct their scams, which can be tailored to specific segments using legitimate tools that are available to advertisers. For instance, a scam could target individuals based on their previous purchases or personal details such as age and location. Alternatively, user accounts can be hacked and used to conduct scams on the account holder’s contacts. Individuals of all ages are falling victim to these scams, although it is the younger age groups that are most affected as they tend to use social media platforms more extensively. Out of all reports of money lost to fraud by individuals aged 20-29, 38% were initially contacted via social media networks, and 47% for individuals in the 18-19 age group.
The most common losses to social media scams were for non-existent products, which were purchased by not delivered. These scams accounted for 44% of all fraud cases that originated on social media. The most common products advertised in these scams were clothing and electronic goods, with Facebook and Instagram the most commonly abused platforms. While these scams were the most common, the biggest losses came from investment scams, where users are tricked into investing large sums in fraudulent investment opportunities, the most common of which were related to cryptocurrencies. In the first 6 months of 2023, more than half of all fraud losses were to fake investment schemes. Romance scams were the second highest cause of losses. These scams tend to start on Facebook, Instagram, or Snapchat. Contact is made, a rapport is built up, followed by a request for money.
There are several ways that social media users can limit exposure. Social media networks have privacy settings, which should be configured to limit the information that is exposed. Users should consider setting limits on who can view posts and account information, such as restricting post views to friends only. Users should be wary of any notification about either an opportunity or a need for money. Accounts may have been compromised, so any request should be verified via the telephone. Romance scams are common. While social media can provide a way to find love, never send money to anyone that you have not met in person.
Legitimate companies use social media networks to promote their products. If there is an exciting product or opportunity, conduct some due diligence on the company before making any purchase or transferring funds. The FTC recommends also conducting an online search using the company name plus “scam” or “complaint.” If an offer seems almost too good to be true, it most likely is.
Finally, while it may be embarrassing and difficult to admit to being fooled by a scam, it is important to report it. For online purchases and bank transfers, the scam should be reported as soon as possible to the financial institution that was used, as it may be possible to recover the funds. The scams should also be reported to the FTC or the equivalent authority if you are not based in the United States. Reporting scams can help agencies such as the FTC build cases against scammers to bring them to justice as well as alert others to stop them falling victim to scams in the future.
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