FTC report highlights social media’s role in billions lost to scams

In a recently released report, the Federal Trade Commission (FTC) has uncovered the prominent role played by social media platforms in facilitating scams that have resulted in massive financial losses for consumers. The report illuminates how scammers leverage the capabilities of social media to engage in fraudulent activities and highlights the deceptive ads on platforms like Facebook and Instagram that lure users into their schemes. The findings are alarming, with consumers estimated to have suffered approximately $2.7 billion in losses due to social media-related fraud between January 2021 and June 2023.

The report dissects these fraudulent activities into two primary categories:

1. Commerce-Related Scams (44% of reports): These scams revolve around enticing users with online purchases that, in reality, never materialize. Often, individuals fall prey to these scams after responding to advertisements on social media. While these scams account for a significant portion of reports, they contributed only 8% to the total financial losses. The median individual loss in this category stands at $100.

2. Investment-Related Scams (20% of reports): Investment scams, frequently involving cryptocurrency, employ tactics that promise users substantial returns on their investments. Scammers on social media platforms fabricate success stories to attract victims, guiding them to fictitious investment websites and apps. Intriguingly, investment-related scams accounted for a staggering 53% of the overall financial losses, with a median individual loss averaging $3,000.

The FTC has presented several recommendations to safeguard users against falling prey to such scams. These suggestions encompass a thorough review of privacy settings to restrict post visibility and personal information sharing. It’s advised to limit who can access your posts and information on social media platforms. Although all platforms gather data from your social media activities, taking a moment to visit your privacy settings can help you set some restrictions.

Moreover, users are urged to exercise caution if they receive messages from friends regarding opportunities or urgent money needs, especially if the request involves payment by cryptocurrency, gift card, or wire transfer. Scammers often employ these methods to extort funds. In the realm of online friendships and romances, individuals should remain vigilant if someone rushes into forming a connection. It’s essential to familiarize oneself with the dynamics of romance scams and refrain from sending money to someone not met in person. Before making any purchase, conducting an online search for the company’s name along with keywords like “scam” or “complaint” can provide valuable insights into the legitimacy of the business. These recommendations aim to fortify users against a range of deceptive practices and fraudulent schemes. 

Fraudulent activities also pose a substantial financial risk to advertisers. According to a recent study, approximately 22% of the entire digital advertising expenditure, along with 30% of the budget allocated for mobile advertising in 2023, is susceptible to being lost to fraudulent activities.