Reported losses from scams originating on social media have reached $2.7 billion since 2021.
Social media enables scammers to manufacture a fake persona or hack into a profile to pretend to be a friend of their intended victim, the FTC said in a data spotlight. The technology also allows scammers to target victims based on age, interests or past purchases.
“All of this costs them next to nothing to reach billions of people from anywhere in the world,” the FTC said in the data spotlight.
Online shopping scams constitute the most frequently reported type of scam on social media, accounting for 44% of all reports during the first half of 2023, according to the press release. Victims often fall prey to fraudulent sellers who advertise products on platforms like Facebook or Instagram but fail to deliver the ordered items.
While online shopping scams are the most commonly reported, investment scams on social media result in larger overall losses, comprising 53% of the total reported losses in the first half of the year, the release said. These scams often involve the promotion of bogus investment schemes, with scammers exploiting social media platforms to lure unsuspecting victims.
Cryptocurrency has played a significant role in these investment scams, with more than half of the reports indicating that consumers paid the scammers using digital currencies, per the release.
Second to investment scams, the next most reported losses on social media came from romance scams, according to the press release.
To combat the rising threat of social media scams, the FTC recommends several proactive steps that consumers can take to safeguard themselves. First, limiting the visibility of posts and personal information on social media platforms can help reduce the risk of being targeted by scammers, the release said. Additionally, if someone claiming to be a friend or relative contacts individuals on social media and requests money, it is advisable to verify the request through direct phone communication before taking any action.
PYMNTS Intelligence has found that social engineering scams, in which criminals use online tools to gain and then exploit a victim’s trust, is a rising challenge. Fake websites, phishing emails and malware-infected ads are among the online tools used in these scams, according to the “Digital Fraud Tracker,” a PYMNTS and DataVisor collaboration.