One in Four Scams Originated from Social Media in 2021: FTC

More than one in every four people who lost money to online scammers in 2021 stated the fraud began with a legitimate-looking post, ad, or message on a social networking platform, reported FTCOpens a new window . Scams are also increasing by the year, more so in the last two years.

Last year, online scammers raked in millions of dollars by exploiting people’s security via social media platforms. The losses in the previous year nearly tripled from 2020 and were greater than 1800% from 2017. Almost 95,000 netizens lost $770 million to scammers, who targeted them via social media platforms, stated the Federal Trade Commission (FTC) in its new report.

The number of victims has also grown to a new high, surpassing 46,000 in 2020. The findings presented in the chart below are in sharp contrast with the scam data recorded in the years before the COVID-19 outbreak.

Losses and Number of Victims of Scams on Social Media | Source: FTC

This is predictable, considering that the pandemic compelled people to spend more time online for work, news, communication, entertainment, and content consumption. Social media is one of the major sources for general content and news consumption and a place for user interaction. As a result, there was a relative increase in the attack surface.

However, FTC didn’t clearly delineate the role that COVID-19 may have played in exacerbating the situation and encouraging fraudsters in the past two years. Possibly because the overall losses from fraud in 2021 fell to over 10% ($2.961 billion) of 2020 ($3.3 billion).

The $770 million losses from scams and fraud that originated on social media is 26% of the total $2.961 billion, a cause of concern. “For scammers, there’s a lot to like about social media. It’s a low-cost way to reach billions of people from anywhere in the world. It’s easy to manufacture a fake persona, or scammers can hack into an existing profile to get ‘friends’ to con,” noted the FTC.

The federal U.S. gov agency added, “There’s the ability to fine-tune their approach by studying the personal details people share on social media. In fact, scammers could easily use the tools available to advertisers on social media platforms to systematically target people with bogus ads based on personal details such as their age, interests, or past purchases.”

See More: Valentine’s Day: Tips for Dating Safely And Saying No to Scammers Online

Top Three Profitable Scams on Social Media

Investment-related scams

Everyone is looking to invest and create wealth, which is why bogus investment opportunities or scams are the most prevalent ones on social media. According to the FTC, 54% of victims pointed out social media as the contact method.

Targets are usually lured in with promises of weighty returns, for which they pay in cryptocurrency (64%), payment app or service (13%), and bank transfer or payment at (9%). The cryptocurrency surge of 2021 that saw bitcoin, ethereum, and other digital currencies achieve new highs, both in terms of valuation and by extension market capitalization, proved to be an ideal backdrop for scammers.

Soaring valuation, fear of missing out, and the fact that cryptocurrency is an alien concept to most people bodes well for fraudsters. Combine that with the latest trends, and users may overlook the underlying hollowness of multiple fraudulent schemes. Case in point: valuation of the SQUID crypto token based on the Netflix hit show Squid Game rose by an astounding ~75,000% before quickly nosediving the same way it went up and losing 99.99% of its valuation.

The most popular platforms for investment-related scams were Instagram (36%), Facebook (28%), WhatsApp (9%), and Telegram (7%). Investment scams accounted for 37% of all scams on social media.

Romance scams

Crooks exploit people’s need or desire for a romantic relationship, which is why romance scams are the second most popular sort of scam on social media (24 %). More than a third of victims said the fraud originated on Facebook or Instagram.

“These scams often start with a seemingly innocent friend request from a stranger, followed by sweet talk, and then, inevitably, a request for money,” the FTC said. The most common methods of payments by the victims to scammers are gift cards or reload cards (30%), cryptocurrency (18%), and payment apps or services (15%).

See More: Congress Introduces New Bill to End Targeted Digital Advertising by Big Tech

Online shopping

Online shopping is where victims bled the third-most. It contributed 14% of the total $770 million losses in scams on social media. However, online purchasing, namely shopping for anything advertised on social media, was the source of the majority of the 95,000 victims.

FTC said 45% of scam reports were attributed to online shopping scams. “In nearly 70% of these reports, people said they placed an order, usually after seeing an ad, but never got the merchandise. Some reports even described ads that impersonated real online retailers that drove people to lookalike websites.”

This is why the median losses from online shopping scams on social media were the lowest at $115, while the median losses from investment scams and romance scams stood at $1,800 and $2000, respectively.

Nine out of 10 named Facebook or Instagram as the social media platforms where the scam originated. This can be bad news for Meta, which seeks to extract the maximum ecommerce potential of two of the largest social networks through marketplace and an increased shopping-centric focus for the photo and video sharing app.

Source: FTC

The most common payment methods in online shopping scams by victims were payment app or service (29%), debit card (28%), and credit card (24%).

FTC’s data came from fraud/scam reports by victims, most of whom were aged 18 to 39 years old. This is because people from this age group are 2.4x more likely than people aged 40+ to be targeted on social media.

How to Deter Scams on Social Media

The actual number of fraud victims may be much higher considering only 4.8% of victims reported it to Better Business Bureau or any government agency. Staying vigilant is the way to go. The FTC recommends the following:

• “Limit who can see your posts and information on social media. All platforms collect information about you from your activities on social media but visit your privacy settings to set some restrictions.

• Check if you can opt out of targeted advertising. Some platforms let you do that.

• 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 by cryptocurrency, gift card, or wire transfer. That’s how scammers ask you to pay.

• If someone appears on your social media and rushes you to start a friendship or romance, slow down. 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 its name plus “scam” or ‘complaint.’”

If you were victimized or came across online scams, you can report to the FTC hereOpens a new window .

Let us know if you enjoyed reading this news on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We would love to hear from you!