Scammers are lurking in plain sight on social media platforms and reports to the FTC’s Consumer Sentinel Network indicate big profits. One in four people who reported losing money to fraud since 2021 said it started on social media.[1] Reported losses to social media scams during the same period totaled a staggering $2.7 billion, far higher than any other method of contact. And because the vast majority of fraud goes unreported, this figure only reflects a small fraction of the public harm.[2]
Social media gives scammers an edge in several ways. They can easily create a fake persona, or hack into your profile, pretend to be you and scam your friends. They can learn to adjust their approach from what you share on social media. And scammers who post ads can even use tools available to advertisers to methodically target you based on personal details, such as your age, interests, or past purchases. All this costs them next to nothing to reach billions of people from anywhere in the world.
Reports show that social media scams are a problem for people of all ages, but the numbers are most striking for younger people. In the first six months of 2023, in reports of money lost to fraud by people 20-29, social media was the contact method more than 38% of the time. For people 18-19, that figure was 47%.[3] The numbers decrease with age, in line with generational differences in social media use.[4]
The most reported fraud loss in the first half of 2023 was from people trying to buy something marketed on social media, accounting for a whopping 44% of all social media fraud loss reports. came Most of these reports are about undelivered goods, with clothes not arriving and electronics at the top of the list.[5]According to reports, these scams usually start with an ad on Facebook or Instagram.[6]
While online shopping scams have the highest number of reports, the bulk of dollar losses are to scams that use social media to promote fake investment opportunities.[7] In the first six months of 2023, more than half of the money reported as a result of social media fraud went to investment scammers. To draw people in, these scammers promote their own supposed investment success, often trying to lure people to investment websites and apps that turn out to be fake. They make promises of huge returns, and even make it look like an “investment” is growing. But when people invest, and reports say it’s usually in cryptocurrency,[8] they end up empty handed.
After investment scams, reports indicate that romance scams have the second largest losses on social media. In the first six months of 2023, half of people who said they lost money to an online romance scam said it started on Facebook, Instagram or Snapchat.[9] These scams often start with a seemingly innocent friend request from a stranger, followed by love bombing and the inevitable request for money.
Here are some ways to stay away from social media scams:
Limit who can see your social media posts and information. All platforms collect information about you from your social media activities, but visit your privacy settings to set certain restrictions. If you get a message from a friend about an opportunity or an urgent need for money, call them. Their account may have been hacked – especially if they ask you to pay with cryptocurrency, gift card or bank transfer. This is how scammers ask you to pay.
If someone pops up on your social media and slows down your rush to start a friendship or romance. Read about romance scams. And never send money to someone you haven’t met in person.
Before you buy, check out the company. Search online for his name plus “scam” or “complaint.” Visit ftc.gov/scams to learn more about how to spot, avoid, and report scams—and how to get a refund if you paid a scammer. If you see a scam, report it to the FTC at ReportFraud.ftc.gov.
[1] This figure excludes reports that did not specify a contact method. Including reports directly to the FTC and reports provided by Sentinel data contributors, 257,945 reports of money lost due to fraud originating on social media were submitted from January 2021 to June 2023.
[2] See Anderson, KB Who do victims of mass market consumer fraud complain to? at 1 (May 2021), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3852323 (study showed that only 4.8% of people who experienced mass market consumer fraud at a Better Business Bureau or a government entity).
[3] These figures exclude reports that did not specify a contact method and reports that did not include age information.
[4] See Pew Research Center, Social Media Use in 2021 (April 2021), available at https://www.pewresearch.org/internet/2021/04/07/social-media-use-in-2021/ (study showed that people ages 18-29 reported the highest social media use at 84%, followed by ages 30-49 at 81%, ages 50-64 at 73% and 65 and over at 45%. In the first 6 months of 2023, the share was loss reports indicating social media as the contact method by age as follows: 47% (18-19), 38% (20-29), 32% (30-39), 28% (40-49), 26% (50- 59), 21% (60-69), 15% (70-79), 9% (80 and over). Social media was the top contact method according to fraud loss reports for all age groups under the age of 70, while phone calls were the top contact method for the 70-79 and 80 and over age groups.
[5] The top undelivered items were identified by hand-coding a random sample of 400 reports that contained a narrative description identifying the ordered items.
[6] In the first 6 months of 2023, people reported undelivered goods in 61% of online shopping fraud loss reports that originated on social media. Facebook was identified as the social media platform in 60% of these reports, and Instagram was identified in 24%. This excludes reports that did not identify a platform.
[7] The top platforms identified in these reports were Instagram (30%), Facebook (26%), WhatsApp (13%) and Telegram (9%). Reports that did not indicate a platform are excluded from these calculations.
[8] In the first 6 months of 2023, cryptocurrency was identified as the payment method in 53% of investment-related fraud reports that indicated social media as the method of contact. This excludes reports that did not specify a payment method.
[9] Facebook and Instagram were each identified in 21% of these reports, followed by Snapchat at 8%. This excludes reports that did not specify the platform, website or program.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
UnCirculars – Cutting through the noise, delivering unbiased crypto news
