Social media is hyping products and investment opportunities that sound too good to be true…probably so, as the FTC wants you to know.
In fact, according to the US government regulator, since 2021, people have lost more than $2.7 billion due to scams spread through social networks. According to FTC data, social media is the primary method for scammers to contact their victims.
The most commonly reported scams on social media in the first half of 2023 involved online shopping scams, particularly in clothing and electronics, which accounted for 44 percent or 24,640 of the reported incidents. This typically involves someone purchasing something advertised on Facebook, Instagram, or Snapchat and then never receiving the product.
While online shopping scams are the most common problem, people are losing more money to social media schemes that promote fake investment opportunities and romance scams, according to FTC totals from January to June.
“A typical modus operandi might involve selling money for perceived investment opportunities, often using cryptocurrencies as a hook,” says the FTC’s Data Spotlight. “Scammers lure people to websites or apps with their own supposed ‘success stories’, but consumers end up with empty hands and empty wallets.”
Total losses reported during that six-month period totaled $658 million, of which 8 percent were due to online shopping scams, 53 percent to investment scams, 14 percent to romance lures and 27 percent to “other.”
It’s worth noting that most online scams are never reported, so all of these numbers are much higher in reality. As the FTC says, these numbers “reflect only a small fraction of the public harm.” In more than half of investment scam reports, internet users paid criminals with cryptocurrencies.
Additionally, younger people seem to fall for, or at least report, social media scams more often than older people. The regulator claimed: “In the first six months of 2023, social media was the method of contact for reports of funds lost to fraud by 20- to 29-year-olds in more than 38 percent of cases. Among 18 to 19 year olds it was 47 percent.
“The numbers decline with age, which is consistent with generational differences in social media use.”
While these crimes typically target individuals, companies should also be concerned about fraudsters’ use of social media advertising. “No legitimate retailer wants their marketing messages to be clouded by proximity to fraud,” the FTC says.
The Consumer Protection Agency also offers some tips on how to avoid becoming the next victim of online crooks. This includes, among other things, setting your social media account to private or at least limiting who can see your posts.
Also: Do not believe messages from a “friend” who claims to need money and asks you to pay with crypto or gift cards. There is a very high chance that this message is fake or that your account may have been taken over.
The same goes for online romances — especially with super-hot people who never seem to be able to meet in person but suddenly need cash to pay their elderly grandparents’ medical bills or airfare to meet their supposed partners.
Around Valentine’s Day, the FTC highlighted these types of downsides alone, reporting that romance scams cost victims at least $1.3 billion in 2022. Nearly 70,000 people reported these crimes last year, with the average loss being around $4,400, and those are just the ones that admitted. ®