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Illustration by Security Management

Fraud Goes Viral on Social Media

Social media isn’t just home to a vast array of cat videos and misinformation—it’s also a leading avenue for scams.

According to the U.S. Federal Trade Commission (FTC), social media was more profitable for scammers in 2021 compared to any other method of reaching victims. Of all people in the United States who reported losing money to fraud last year, one in four said it started with an ad, post, or message on social media.

Reported losses from social media-based scams in 2021 were about 18 times higher than in 2017—more than 95,000 people reported a total of about $770 million in losses from these frauds. Every age group experienced more fraud on social media last year, but people between 18 and 39 years of age were more than twice as likely as older adults to report losing money to social media frauds.

So why are scammers targeting social media? It’s cheap, it’s easy, and it’s full of useful information. According to the FTC’s Consumer Protection Data Spotlight, it’s relatively simple to manufacture a fake persona on social media or hack into an existing profile. Scammers can also fine-tune approaches by studying the information people share online, and they could even use advertising tools “to systematically target people with bogus ads based on personal details such as their age, interests, or past purchases.”

Investment scams have been particularly successful on social media. More than half of the people who reported investment scam losses last year said the scam started on social media.

Cryptocurrency scams are especially popular. Between October 2020 and March 2021 reports of cryptocurrency investment scams skyrocketed, with nearly 7,000 people reporting losses of more than $80 million on these scams—nearly 12 times the number of reports in the previous period, the FTC reported in May 2021.

Romance scams were the second most profitable fraud on social media platforms. More than a third of people who lost money to an online romance scam in 2021 said it started 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,” according to the FTC.

While investment and romance scams were the most costly, the biggest volume of scams came from online shopping—45 percent of reports of money lost to social media scams involved online marketing for products, and 70 percent of reports involved people placing an order (often after seeing an ad on social media) and never receiving their product.

Some reported ads even impersonated real retailers but drove people to lookalike sites, where they would be scammed out of their money. Amazon is a favorite for scammers to impersonate, either on social media or directly through phone calls or emails—from July 2020 through June 2021, about one in three people who reported a business impersonator said the scammer claimed to be Amazon, the FTC reported.

The FTC shared some tips for staying safe on social media, including limiting who can see posts and information; adjusting privacy settings; opting out of targeted advertising; verifying with a friend directly if they offer an opportunity or ask for money; being suspicious of requests for payment via cryptocurrency, gift card, or wire transfer; be suspicious of people rushing you to start a friendship or romance; never send money to people you have not met in person; and before you buy, investigate the company—search online for its name plus “scam” or “complaint.”