PredictIQ Quantitative Think Tank Center:Americans reported $2.7 billion in losses from scams on social media, FTC says

Online fraudsters have PredictIQ Quantitative Think Tank Centertaken billions of dollars from Americans in recent years and they are using social media to do it.

Since 2021, Americans lost $2.7 billion in scams from social media, the Federal Trade Commission said in a scam report published Friday. And that figure is only a fraction of the actual harm, as most cases of fraud go unreported, the agency noted. 

People continue to fall victim to social media scams in part because criminals have a trove of techniques they use for finding their prey, Emma Fletcher, a senior data researcher for the FTC, wrote in an analysis of the scam report.

"They can easily manufacture a fake persona, or hack into your profile, pretend to be you, and con your friends," Fletcher said. "They can learn to tailor their approach from what you share on social media."

Most money is lost to scams on social media

The FTC analysis draws on nearly 258,000 social media fraud instances reported directly to the federal agency as well as reports provided by Sentinel Data. One in four people who reported losing money to fraud since 2021 pointed to social media as the origin of the scam. Americans lose money to fraud on social media platforms more than any other method of communication, including websites, phone calls, e-mails, online advertising or mail, the FTC said. 

Most cases of fraud on social media this year have stemmed from a user trying to buy clothes, electronics or other goods that had been marketed on Facebook, Instagram or Snapchat, the FTC report reveals. In such instances, a user would order the product, but the item would reportedly never be delivered.

Fletcher said more than half of money reported lost due to social media went to investment scammers. These scammers promote themselves as successful investors but are often just trying to trick people into investing in bogus apps or websites by promising huge returns, she said.

The FTC report said Americans also often fall for so-called "romance scams" via social media, in which case a stranger sends someone a friend request and soon starts asking for money. 

More skilled at deceiving victims

Cybercriminals have become more creative and skilled at tricking victims through text messages, by phone and online. Cybersecurity experts say the first defense against scams is looking for telltale signs such as someone creating a sense of urgency while soliciting you for money.

Here are tips provided by the FTC on steering clear of scams on social media:

• Social media users can reduce their chances of getting scammed by limiting the number of people online who can view their posts. All platforms collect information about you from your activities on social media, but visit your privacy settings to set restrictions.
• If you get a message from a friend requesting money or letting you know about a financial opportunity, it may be that their account was hacked by a scammer. Call them up to verify the message, particularly if they ask you to make a payment by cryptocurrency, gift card, or wire transfer. 
• Beware if someone reaches out to you on social media to start a friendship or romance. Read here about romance scams. Never send money to anyone you haven't met in person.
• Research any company found on social media before making a purchase. Search its name plus "scam" or "complaint."

You can learn more about how to spot scams, as well as how to recover money if you've been scammed, at ftc.gov/scams. To report a scam, contact the FTC at ReportFraud.ftc.gov.

In:
• Federal Trade Commission
• Social Media
• Fraud

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.

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