Social media is a great way to stay in touch with friends and family and has become an increasingly popular method for marketing a business’s services or products to potential buyers. However, reports to BBB Scam Tracker and the Federal Trade Commission (FTC) show that social media is also becoming a prime destination for scammers seeking to con people out of their money. The FTC states that more than 1 in 4 people who reported losing money to fraud in 2021 said it started on social media, and the platforms are more profitable for scammers than any other method of contacting people.
In 2021, more than 95,000 people reported $770 million in losses to fraud initiated on social media to the FTC, accounting for 25% of all reported losses to fraud for the year. From 2017 to 2021, reported losses to fraud increased 18 times, and the number of people who reported losing money grew to 19 times higher than in 2017.
Despite the record-highs, these numbers only reflect a fraction of the public who encountered fraud on social media. According to a recently published study conducted by the FTC, only 4.8% of people who experience mass-market consumer fraud complained to Better Business Bureau or a government entity. Among those that report fraud encountered on social media, the most common are investment, romance and online purchase scams.
Investment Scams
More than half of consumers who reported investment scams in 2021 said the con started on social media, particularly those including fraudulent cryptocurrency investment opportunities. The FTC’s Consumer Sentinel Network lists investment-related fraud as the 7th most-reported type of fraud in the first three quarters of 2021, with total losses across the U.S. at nearly $956 million with a median loss of $2,800.
Investment scams on social media typically begin as an unsolicited offer or opportunity that promises a guaranteed return of investment that may seem too good to pass up. Often, scammers will hack into the profiles of friends and family members, using their networks to initiate a conversation. Believing that the offer is being recommended from a trusted source, the victim invests and loses their money and their own social media account, which the con artist uses to reach out to another set of targets.
In December 2021, one Texas resident reported to BBB Scam Tracker, “[The scammer] played upon my emotions and accused me of having trust issues and a pessimistic way of thinking that people are only out here to steal money, which is exactly what he did. He stole my money and ended up hacking my Facebook account.”
Key indications that you may be interacting with an investment scam include:
- Scammers guarantee that you’ll make money. Remember that even first-hand testimonials can be faked, especially if they are from a prominent figure. No one can guarantee significant returns, and claims to the contrary should be considered a red flag you may be interacting with a scammer.
- Scammers promise free money. Often, scammers may entice victims to provide information or just signup for an opportunity under the assumption they will give the victim money for free. They may promise it will be provided by either cash or cryptocurrency, but in either case, almost all free money offers are scams.
- Scammers promise big claims without details. Scammers will often be vague or non-descriptive when asked how the money will be invested and how returns are handled. Be sure to ask pointed questions about the investment opportunity and take the time to research and verify their claims. Be especially wary of opportunities that require immediate investment or action before you’ve had a chance to prove their legitimacy.
Romance Scams
According to FTC data, romance scams are the second-most profitable fraud on social media, accounting for 24% of all money lost to scams originating on social media in 2021. In a Feb. 10 press release, the FTC reported romance scams hit record highs in 2021 with losses of $547 million, more than six times reported losses in 2017 and a nearly 80% increase from 2020 levels. In particular, reports from consumers ages 18-29 increased more than tenfold from 2017 to 2021. On average, victims who lost money to romance scams reported a loss of $2,400.
“Instances of romance scams reported to BBB and the FTC continue to increase at astonishing rates,” said Heather Massey, vice president of communications for Better Business Bureau serving the Heart of Texas. “These con artists may spend weeks or months of their time establishing a relationship with a target which, inevitably, turns to a request for money to pay for some immediate or emergency situation.”
Often, con artists will say they live or travel outside of the U.S. and are employed by working on an oil rig, in the military or as a doctor with an international organization. Soon after establishing a relationship with the victim, the scammer will ask their target for money to help them pay for an immediate or emergency situation, such as a medical operation, travel expenses to come to the U.S. or unpaid debt. Reports of scammers using romance scams as an opportunity to push a cryptocurrency investment scam are also increasing.
Key indications you may be interacting with a romance scam include:
- Scammers provide vague answers to questions. When asked about some of their favorite places to eat, socialize or visit in the area they claim to live, they often redirect the conversation. They may claim they cannot provide additional information when asked about the company they are employed with or their specific organization. An unwillingness to provide this information is a key indicator you may be involved with the wrong type of person.
- Scammers move relationships quickly. For most people, falling in love with a romantic interest takes time and shared experiences. Immediate confessions of adoration and love, even if reciprocated, should be treated with caution before having an opportunity to meet in person or take part in a digital date. Con artists are well-versed in making themselves appear to be what they are not, including using language that may seem to be genuine.
- Scammers provide edited or fake photos. A common tactic of scammers is to steal photos online of either people they are claiming to be or of locations where they claim to live. Use reverse image search to see if the photo is publicly available or of another person. Scammers are proficient in the use of editing software and may use a standard picture of a landmark with a picture of themselves edited in. Look for the hallmarks of edited photos, such as signs of warping, an interrupted background pattern or missing shadows.
Online Purchase Scams
While online purchase scams come in as the third-most profitable scam originating on social media, it is the No. 1 most reported. The FTC states that 45% of the 95,000 scams originating from social media reported to the agency in 2021 were regarding instances of online purchase fraud. Reports to BBB Scam Tracker include examples of fraudulent sellers advertising the sale of small products, such as personalized jewelry, as well as big-ticket items, such as vehicles or boats, which the buyer never receives. Recently, online pet scams have risen to enact a detrimental toll on American consumers, with approximately 80% of sponsored pet ads as fraudulent.
According to BBB’s 2021 Online Purchase Scams Report, one of the most significant factors determining whether a purchaser loses money on an online purchase originating from social media is if that person was actively shopping or passively browsing. Twenty-three percent of consumers actively shopping on Facebook and Instagram lost money to an online purchase, as opposed to 55% of consumers who were passively browsing on the platforms when they encountered the ad.
Key indications you may be interacting with an online purchase scam include:
- Scammers promote deals that seem too good to be true. Everyone wants to find a good deal on a sought-after product, and scammers use this tendency to entice consumers to pay before taking the time to research the business or seller. Be especially wary of deeply discounted name-brand items or expensive products being sold at extremely low prices.
- Scammers use aggressive selling tactics and a sense of urgency. Be wary of deals advertised as “limited-time” offers or require you to “act now” under the claim that the deal will disappear. Scammers on social media want consumers to make immediate decisions and send immediate payment before allowing them to research the business to determine if the offer is legitimate.
- Scammers want quick, anonymous payments. Online sellers that insist on payments through gift cards, wire transfers or mobile banking apps should be handled with extreme caution, as scammers know that these payment methods are quick, anonymous and almost impossible to reverse. Whenever possible, BBB recommends consumers use credit cards for all online purchases due to the additional protections offered by credit card companies to dispute charges.
If you have been a scam victim, report it to BBB Scam Tracker. Information provided may prevent another person from falling victim. For more information about these and other scams, as well as tips to avoid falling for the schemes of con artists, visit BBB.org.
