Americans lost a whopping $2.7 billion in scams that reached them via social media, and the actual figure could be much higher, according to the Federal Trade Commission (FTC).
Of those who reported losing money to fraud over the past two years, 25% said the problem started on social media, the agency wrote in a report this month. But that likely barely touches the true scope of the problem, because only about 4.8% of people who were the victims of mass-market consumer fraud complained to the Better Business Bureau or a government entity, the FTC said, citing a study by the Social Science Research Network.
Between the ease and low cost of running such scams and the growing numbers of people hopping onto multiple social media networks, it’s likely the numbers will climb in the coming years.
“Social media gives scammers an edge in several ways,” wrote Emma Fletcher, senior data researcher at the FTC. “They can easily manufacture a fake persona, or hack into your profile, pretend to be you, and con your friends. They can learn to tailor their approach from what you share on social media.”
Scammers who place ads also can use the same tools advertisers use to target victims based on such personal details as their age, interests, and purchasing history.
“All of this costs them next to nothing to reach billions of people from anywhere in the world,” Fletcher wrote.
A Lot of People on Social Media
According to numbers from Statista, about 4.89 billion people around the globe use social media, with that number expected to grow to 5.85 billion by 2027. In addition, the average user spends about 145 minutes on social media each day and is on more than eight social media platforms.
To play that out, if the average person kept this use up over the average life span of 73 years, they would spend 5.7 of those years on such platform, Forbes noted.
Given such huge numbers regarding social media use, it’s not surprising scammers are shifting so quickly in that direction. In fact, the money reported lost to fraud via social media was more than any other method of contact, including websites or apps ($2.08 billion), phone calls ($1.9 billion), email ($900 million), and text ($600 million), the FTC found.
Shopping Online Account for Most Scams
Online shopping scams accounted for most of the social media-based loss in the first half of this year, involving 44% of scams reported, according to Fletcher. Most of the reports involved goods that weren’t delivered, with clothing and electronics topping the list.
Most of such scams most often started with an ad on Facebook or Instagram, both owned by parent company Meta.
However, the scams that accounted for the most money lost were fake investment opportunities, accounting for 53% of all the total report loss, according to the FTC.
“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 bogus,” Fletcher wrote. “They make promises of huge returns, and even make it look like an ‘investment’ is growing. But if people invest, and reports say it’s usually in cryptocurrency, they end up empty handed.”
Romance scams – where the fraudster reaches out and tries to establish a friendship, which then escalates to a romantic interest before the bad actor starts asking for money – accounted for the second highest amount of money lost, at 14%, according to the FTC.
While shopping scams are most common, they only result in 8% of all losses.
An Ongoing Problem
The FTC is keeping a steady drumbeat of warnings to consumers and businesses about online scams, including those that start on social media. Earlier last week, the agency sent out a warning about dishonest charity fundraisers, which followed recent alerts about business coaches, scams involving Medicaid enrollment and federal education loan forgiveness, and false ads for remote jobs.
In February, the FTC reported that U.S. consumers losing almost $8.8 billion to fraud in 2022, a 30% year-to-year increase.
Included in the steps the FTC recommends consumers and organization take to protect themselves from scams on social media are limiting who can see your posts and information on the platforms and – if a friend messages you about an opportunity or urgent need for money – call them to make sure their account hadn’t been hacked.
That’s particularly important if the person asks for payment in cryptocurrency, gift cards, or wire transfers, which Fletcher noted is “how scammers ask you to pay.”
Don’t rush into a friendship or romance with someone who suddenly appears on your social media page and before buying anything, check out the company selling the product, including search for the online by name along with the word “scam” or “complaint.”