Social media has brought the world closer together in many ways, some of them wonderful. But there are many dark sides to out modern connectivity, and one that has reared its ugly head increasingly in the past few years is the ability of criminals to use social media to scam people out of their money. According to a recent report from the Federal Trade Commission, more than 95,000 reported losing money to social media scams in 2021, losing about $770 million. That accounts for around one quarter of all fraud losses reported by Americans last year.
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Social Media Scams in 2021
As social media becomes more and more wrapped into modern life — and if recent innovations like Facebook’s “Metaverse” are any indication, we’ll be spending even more time in digital spaces going forward — the ability of scammers to target people for their money has only grown. The 95,000 reports of social media scam represents a 19 times increase over the total reports of 5,000 cases in just 2017. The amount of money lost has grown 18 times, from around $42 million in 2017 to the $770 million reported last year.
And while you may think that social media scams only happen to old people — think Nigerian prince scams perpetrated on boomers who can’t operate their emails or romance scams that end up with a woman on Dr. Phil who swears she’s in a relationship with a country music star — people between the ages of 18 and 39 were actually twice as likely as older adults to report losing money to a social media scam in 2021.
The FTC notes that social media is popular with scammers because it is low-cost and can reach billions of people quickly all around the world. The agency report also says that scammers can even use the tools designed to be used by advertisers on social media platforms to target potential scam victims.
Types of Social Media Scams to Look Out For
If you’re going to avoid being the latest victim of a social media scam, it’s important to know what to look for. With that in mind, here are some of the most popular social media scams to look out for, according to both the FTC and other sources:
A romance scam involves a scammer pretending to be in a romantic relationship with her mark and, after building up a “relationship,” asking for him to send money. The scammer will say she needs the money to pay bills or maybe even to pay for tickets to come see her mark. Eventually, the scammer will disappear leaving the mark both heartbroken and possibly ruined financially. These scams represented just 9% of all loss reports but 24% of total reported loss, so they can certainly be costly if you fall for one.
An investment scam is exactly what it sounds like: you’re offered a chance to invest in something and the scammer ends up absconding with your money. These investment opportunities will often sound too good to be true — because they are. Investment scams often involve cryptocurrency, which is hard to track. Investment scams made up 37% of all losses and 18% of loss reports in 2021.
Someone will pretend to be someone you know, like a friend, relative or colleague. The person will message you on a seemingly legitimate account and say he needs you to wire money or send cryptocurrency. The twist, in case you couldn’t guess — it’s not them at all, but a scammer you’ve never meant.
Online Shopping Scams
These scams are very common, making up 45% of loss reports in 2021, but are slightly less lucrative for the criminals — only 14% of total lost money came from online shopping scams. These are very simple — you think you’re buying something online, you enter your information and it turns out to be a fake site, possibly even one that is made to look like a known brand. Facebook and Instagram are the hunting grounds for these scams, with 9 out of 10 instances coming from those two platforms.
A phishing scam will ask you to click on a link, possibly sent to your email under the guise of being from a social media site. When you click it, you’ll be asked to enter your information and soon your account can be hacked, possibly allowing identity theft.
The Bottom Line
Social media scams are increasing in popularity, going up massively since 2017. It’s important to be vigilant when you’re on social media, so that you can reap the benefits of increased connectivity without falling for a scam that can ruin you financially and emotionally.
Financial Planning Tips
- The best way to avoid a scam is to have a legitimate financial plan you can stick to, and a financial advisor can help you get there. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Want to see what your investments will look like down the road? Use SmartAsset’s investment calculator to peek into your future.
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