The latest consumer fraud report from Federal Trade Commission (FTC) has put a spot light over the escalating risk of fraud via social media platforms. The report quotes a disturbing increase in social media scams. In 2021, people lost more than $770 million to scams involving social media. An eighteen fold increase over the 2017 numbers. The number of victims also jumped from 5,000 in 2017 to 95,000 in 2021.
FTC’s Consume Protection data spotlight highlights how social media platforms have evolved into a tremendous risk for US consumers. For instance, in 2017, monetary losses via social media scams were at mere $42 million, but last year these scams accounted for more than 25% of all reported losses. In 2021, people lost more than $770 million to scams that used social media to dupe them.
This massive surge results from the amount of personal information that people post on their social media accounts. In fact, social media has become the major source of information for fraud purposes.
By looking at peoples’ social media profile, by studying the personal information that people post, and with the advertising tools available made available by social media platforms, criminals are now able to device fraudulent schemes that cannot be spotted easily. In addition, by hacking ‘friends’ profiles, the criminals can make such schemes appear more legitimate to their target.
Moreover, social media is a low-cost way to reach billions of people around the world. Criminals can easily create a fake profile, fine tune their approach by studying people’s habits, and use the tools provided by social media platforms to lure people into traps that feel legitimate and lucrative to those who lack information security awareness.
Investment scams
Last year, 50% of the people who fell prey to investment scams reported social media platforms as the scammer’s first point of contact. The scammers used the media to either promote their fake investment opportunity, or contacted them directly as “friends” to pitch in the investment.
The report identified Instagram, Facebook, WhatsApp, and Telegram as the four main platforms used by criminals for such scams. Among them, Instagram has become the most platform for unsuspecting users. Nearly 36% of the reported scams involved the photo sharing app.
Top platforms used by scammers in 2021
- Instagram (36%)
- Facebook (28%)
- WhatsApp (9%)
- Telegram (7%)
Unfortunately, those who send money, never get anything back. In 64% of the cases, victims paid using cryptocurrency. It appears that the scammers have begun exploiting the excitement about cryptocurrency to exploit people. For instance, between Oct 2020 and May 2021, the FTC reported receiving more than 7,000 complaints of cryptocurrency investment frauds accounting for more than $80 million in losses to the people.
Romance scams
Along with investment scams, criminals use social media for romance scams as well. During last 5 years, people have lost a whopping $1.3 billion to romance scams. More than $547 million were stolen through romance scams in 2021. In this case, Facebook and Instagram stood out as the scammers’ preferred social media platform.
Top platforms used by scammers for romance scams in 2021
- Facebook (23%)
- Instagram (13%)
Online shopping scams
Scammers used social media for online shopping scams as well. In fact, these scams claimed the largest number of victims across US consumers. About 45% of the complaints of social media scams received by the FTC were from this category. Of them, 70% complaints were of people who placed orders after seeing an ad on social media but never received the goods they paid for.
Nine out of ten such complaints quoted Facebook or Instagram.
Together, the three social media scams – investment fraud, romance scams and online shopping – accounted for 70% of the losses reported to the FTC in 2021.
