There is a huge number of people getting scammed on social media, according to the report by the FTC Federal Trade Commission, which revealed that consumers out there lost $770 million to social media scams in the year 2021. This figure accounted for about ¼ of fraud losses during the last year. Moreover, the number has also increased about 18 times since $42 million in social media fraud was reported to the FTC in 2017. The number of social media scams has increased since scammers have come up with new and better ways to scam people. Another reason is due to the fact that the world is moving toward digitalization, and scams like cryptocurrency and online shopping have become more popular than ever. This also led to a lot of young consumers out there getting scammed, and nowadays, adults aged between 18 to 39 reported scams at a rate that is actually 2.4x higher than adults who are 40+. Sounds shocking, right? Scammers think of social media as one of the most profitable places to scam people. There are 95,000+ fraud victims who said that they were contacted through social media and then ultimately got scammed. This is double the number of victims in 2020 and 19x compared to 2017.
More than one in four victims who reported losing money due to scams to the Federal Trade Commission the previous year said that first, they saw a post, a message, or at times an ad on social media which had led to the scam. Social media scams actually accounted for 26% of losses that happened due to fraud in 2021, excluding the re[prted, which did not specifically mention a contact method. These resulted in a loss of $770 million, while websites and other apps are at 19%, making up a total of $554 million, and phone calls at 18%, making up a total of $546 million. Moving on, the median of the individual losses was highest with phone scams which were at $1110 as compared to $468 lost to social media scams. Also, Facebook and Instagram are the places where these scams occur the most.
In the case of romance scams, there are more than 1/3rd of users reported the first contact they had from the scammer was through Facebook or Instagram. To be a little specific, Facebook accounted for about 23% of romance scams, while Instagram stands at 13%. These scams started with a friend request leading to a sweet conversation, then ultimately asking for money. In some of these cases, people were able to recover their money due to companies like TheClaimers who help scam victims.
Moving on, there are more than half of the investment scams started with different social media platforms where scammers used to promote fake investment opportunities in order to connect with people out there and encourage and persuade them to invest. Instagram stands on the top of the list for these scams accounting for 36%, while Facebook is at 28%, Whatsapp at 9%, and Telegram at 7%.
There are also a very large number of investment scams that involve cryptocurrency, and it was one of the methods of payment in 24% of the investment scams reported in the year 2021.
Different payment apps and services were the methods used in 13% of these cases, while bank transfers and bank payments stand at 9%.
Sure, romance and investment scams have been at the top, where people have lost loads of dollars; however, the ones at the highest are scams invoking people trying to purchase something on social media. In most of these cases, people purchased products after they saw their ad on Instagram and Facebook.
Moving on, in 2021, there were 45% of the reports sent to the FTC regarding money lost in social media scams due to online shopping. 70% of these involved people who placed an order but never got their product. Moreover, some of these scams also reported that the websites were just like designer ones in order to fool people into believing that they were actually purchasing from a real online retailer. 9 out of 10 times, this happened to people on social media.
The increase in the use of online shopping is not the only way people lose their money; however, it is the entire e-shopping system as well as social media companies and businesses. In the last couple of years, Facebook, as well as Instagram, has invested making online shopping a really important part of their services and also promising to connect advertised with customers.
Wrapping it up!
All In all, the FTC said that romance, e-commerce, and investment scams are the ones that accounted for 70% of social media scams in 2021; however, there were other frauds as well associated with social platforms.