Scams that started on Facebook, Instagram and other social media sites doubled year-over-year in 2021, leading to $770 million in consumer losses, a federal agency warns.
Calling social media a “gold mine” for scammers, the Federal Trade Commission (FTC) says these platforms were far more profitable than any other method of reaching consumers for scams. Those who lost money on social media were primarily victims of three kinds of scams.
- Investment scams. There was a “massive surge” in bogus deals for cryptocurrency in 2021.
- Romance scams.
- Online shopping scams in which consumers ordered a product that was marketed on a social media site, but it never showed up.
The more than 95,000 such consumer complaints made last year were twice the number made in 2020, the FTC says, and the dollars lost last year were an 18-fold increase from 2017.
Social media sites offer “a low-cost way to reach billions of people from anywhere in the world,” Emma Fletcher, an FTC data researcher, wrote in an advisory. Scammers can easily manufacture a fake persona or hack into a person’s profile page to find other victims, she said.
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Before striking, crooks vet victims
Bad actors can “fine-tune their approach by studying the personal details people share on social media,” Fletcher added, using “the tools available to advertisers on social media platforms to systematically target people with bogus ads based on personal details such as their age, interests or past purchases.”
While reports were up among all age groups, consumers ages 18 to 39 were more than twice as likely as those ages 40 and older to report losing money to social media-induced scams, the FTC says.
Other key findings
- More than 1 in 4 consumers who reported losing money to fraud in 2021 said it started on social media with an ad, post or message.
- Measured in dollars lost, about 25 percent of the money stolen in scams was obtained in scams that began on social media.
- More than half of consumers who reported losses to investment scams in 2021 said the fraud started on social media.
Reports show scammers promote bogus investment opportunities and connect directly with people by posing as friends and encouraging them to invest. “People send money, often cryptocurrency, on promises of huge returns, but end up empty-handed,” Fletcher said.
Discussing romance frauds, which in recent years have triggered record losses, the FTC says its data shows that more than one-third of the consumers who lost money to such frauds in 2021 said their ordeals began 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,” Fletcher wrote.
Look-alike shopping sites
While investment and romance scams accounted for the most dollars lost, the largest number of reports were from consumers scammed trying to buy something they saw marketed on social media. Forty-five percent of the reports of money lost through social media scams last year involved online shopping. “Some reports even described ads that impersonated real online retailers that drove people to look-alike websites,” Fletcher said. “When people identified a specific social media platform in their reports of undelivered goods, nearly 9 out of 10 named Facebook or Instagram.”
Asked for comment, a spokesperson for Meta, the parent company of Facebook and Instagram, said: “We put significant resources towards tackling this kind of fraud and abuse. We also go beyond suspending and deleting accounts, pages and ads. We take legal action against those responsible when we can and always encourage people to report this behavior when they see it.”
In addition to investment scams, romance scams and online shopping fraud, Fletcher noted there are other frauds originating on social media platforms, with “new ones popping up all the time.”
Social media safety tips
The agency urges consumers to report fraud at ReportFraud.ftc.gov and to try to stay safe using these tips.
- Limit who can see your posts and information on social media. All platforms collect information about you from your activities on social media, so check your privacy settings to establish restrictions.
- Check if you can opt out of targeted advertising, which some platforms allow.
- If you get a message from a friend about an opportunity — or an urgent need for money — call them. Their account may have been hacked.
- Be wary if you are asked to send funds using cryptocurrency, gift cards or a wire transfer, since that’s how scammers ask people to pay them.
- If someone appears on social media and rushes you to start a friendship or romance, slow down. Beware of romance scams. Never send money to someone you haven’t met in person.
- Before you buy something, check out the company. Search its name online and include words such as “scam” or “complaint.”
Katherine Skiba covers scams and fraud for AARP. Previously she was a reporter with the Chicago Tribune, U.S. News & World Report, and the Milwaukee Journal Sentinel. She was a recipient of Harvard University's Nieman Fellowship and is the author of the book, Sister in the Band of Brothers: Embedded with the 101st Airborne in Iraq.