Social media platforms have become breeding grounds for financial scams in 2023 as shown by the most recent data from the Federal Trade Commission. The report highlights a concerning trend of escalating financial scams on social media platforms, targeting unsuspecting users.
The first quarter of 2023 witnessed a distressing surge of 16.12% in social media scams, with a total of 36,688 reported cases, as compared to the 31,596 cases reported in the preceding quarter of 2022.
Delving deeper into this data through comprehensive research and analysis, Money Advisor presents valuable insights into the most prevalent scams observed on social media in 2023, along with the platforms where they are frequently perpetrated:
- Online Shopping
Online shopping tops the list of social media scams in 2023 with 13,544 reported cases resulting in a total loss of $26.8 million for its victims. Online shopping scams exploit sites like Facebook Marketplace and Instagram to entice customers with alluring offers from fake sellers, resulting in financial and personal data losses. Numerous users have reported cases where they came across an advertisement offering products at a discounted rate on Instagram. Excited about the offer, they made payment through the provided link. However, they never received the product and all attempts to contact the seller went unanswered and their credit card details were later used for unauthorized transactions.
- Miscellaneous Investments
Miscellaneous investments come second on the list with 5,444 reported cases accounting for a significant loss of $154.5 million in 2023. These scams are prevalent on investment groups across social media platforms like Reddit and Twitter where individuals are presented with fraudulent investment opportunities promising high yields. A Twitter user came across a tweet advertising a “guaranteed” investment opportunity for a startup company. The advert promised instant wealth and made high return claims. Intrigued by the offer, the user invested a substantial sum of money. The startup turned out to be a scam, and the user lost their entire investment.
- Business Imposters
Business Imposters scams with 3,950 reported cases, resulted in a loss of $19 million for its victims. Fraudsters impersonate legitimate businesses and target users on professional networking social media platforms like LinkedIn to provide financial and personal information. On LinkedIn, a user once got a message from a fraudster posing as a company official of a reputable company in their field. After gaining their trust, the imposter asked for private and sensitive financial information, saying it was required for a lucrative business opportunity. Unknown to the user, the imposter was a scammer who utilized their information for financial fraud.
- Romance Scams
Romance scams commonly perpetrated on Facebook, Instagram, and other dating platforms like Bumble, and Tinder constituted 2,874 reported cases leading to a significant loss of $45.3 million. Scammers exploit emotional connections on these platforms to manipulate victims into sending money. A user once connected emotionally with someone they met on Instagram who appeared to be genuine. The person, however, turned out to be a fraudster who took advantage of their trust, played on their emotions, and persuaded them to send funds under pretences, resulting in a devastating financial loss.
- Family and Friends Imposters
Family and friends’ imposter scams recorded a loss of $5.2 million with 1,831 reported cases. These scams are commonly perpetrated on Facebook, where fraudsters with fake profiles pose as friends or family members in distress needing urgent financial assistance, thereby taking advantage of individuals’ trust and goodwill. A Facebook user once got a message from someone they thought was a member of their family. They had no idea the profile was fake, and the imposter pretended to be their relative in dire need of money. The user contributed a significant sum of money out of concern and trust, only to discover later that they had fallen victim to an imposter scam.
- Government Imposters
The Government Imposters scam recorded 1,742 reported cases and a loss of $11.6 million in the first quarter of 2023. Scammers disguise themselves as government officials on Facebook and Twitter in a bid to defraud individuals. A Twitter user reported getting a message from a person posing as an IRS agent alerting them they had unpaid taxes and would face legal action if the problem wasn’t fixed immediately. Due to his concern over the repercussions, the user transferred a substantial sum of money as payment. They later discovered that the communication was a scam and that they had been duped by a government impostor.
- Job Scams & Employment Agencies
Job scams and employment agency fraud resulted in 1,735 reported cases leading to a significant loss of $8.6 million. Fraudsters exploit individuals looking for employment on professional social networking platforms like LinkedIn with fake job opportunities that charge upfront fees that never materialize. An opportunity to work at a renowned corporation was extended to a LinkedIn member. But after shelling out cash upfront for background checks and processing, they learned that the position never existed, and the fraudsters vanished, leaving them duped and out of money.
- Fake Check Scams
With 1,486 reported cases, fake check scams led to a total loss of $4.4 million. Fraudsters send fake checks, trick individuals into depositing them, and then request a portion of the funds to be returned before the check bounces. Fraud check scams usually occur on social media platforms where individuals buy or sell goods on Facebook Marketplace. A seller on Facebook Marketplace reported having been contacted by a buyer who sent a check for an amount that exceeded the product price. The buyer claimed it was a mistake and requested that the excess funds be refunded. Trusting the buyer, they refunded the excess funds before realizing that the initial check was fake.
- Prices, Sweepstakes & Lotteries
Prices, sweepstakes, and lottery scams recorded 1,227 reported cases leading to a loss of $3.7 million. They are prevalent on Twitter and Instagram. Fraudsters entice users with false claims of winning prizes and ultimately trick them into providing personal information or paying upfront fees. A Twitter user reported getting a message congratulating them on winning a brand-new smartphone in a draw. They were instructed to click a link and enter their personal information to claim the prize. But after providing the necessary information, the user had their personal information compromised resulting in identity theft and financial damages.
- Pyramid & Multi-Level Marketing
Pyramid & multi-level marketing scams resulted in a total loss of $8.4 million with 562 reported cases. These schemes pose legitimate businesses with a focus on recruitment incentives rather than actual sales of products or services. They are commonly perpetrated on Instagram, Facebook, and YouTube. A user reported coming across a video on YouTube promoting a business opportunity that promised high revenue through a unique product. Excited about the testimonials, they invested their finances into the business. But they soon realised they had fallen victim to a pyramid and multi-level marketing scam because rather than selling the product, the company was all about recruiting new members.
These statistics expose a grave threat to social media users’ financial well-being, emphasizing the urgent need to create awareness and set preventive measures against rampant scams on these platforms. They serve as a stark reminder for users to exercise caution and remain vigilant to protect their finances.
Azzam Sheikh, a Digital Strategist at Money Advisor stresses the importance of people exercising caution in the face of these frauds, saying, “The proliferation of financial scams on social media platforms is alarming. The need for people to exercise caution and safeguard their financial security has grown. People must now exercise caution and safeguard their financial security.”
About Money Advisor
Money Advisor is a reputable financial services provider in the UK, operating under the trading styles of Debt Correct. With a focus on personalised debt solutions, Money Advisor helps individuals regain financial stability through services such as Individual Voluntary Arrangements (IVAs), Debt Management, Debt Relief Orders (DROs), and Bankruptcy alternatives. Money Advisor has established itself as a reliable partner, empowering individuals to overcome debt and achieve a brighter financial future.
