Wealth

Americans have been scammed out of $2.7 billion in 2.5 years on social media—7 red flags to look out for

Americans lost $2.7 billion combined to scams originating on social media between January 2021 and June 2023, says a new report from the Federal Trade Commission.

That’s far more than consumers lost in other online scams: $700 million more than website scams and $1.8 billion more than email scams during the same period, the FTC says. The methods are aplenty, from romance scams to fake merchants, or fraudsters who take over your social media profiles and con your friends out of money.

In some cases, scammers even create advertisements — using each social media platform’s own tools — to target users based on age, interests and past purchases. Younger users are especially at risk: Fraud victims aged 18 or 19 were more likely to fall victim on social media during the first six months of 2023 than people aged 20 to 29, according to the FTC’s data.

Those younger users’ tech savvy can end up working against them, David McClellan, CEO of cybersecurity startup Social Catfish, told CNBC Make It last year.

“These people are overly trusting of the technology they’re using, and they’re more apt to respond to a stranger messaging them,” McClellan said.

Most common types of social media scams

The most common type of social media fraud so far this year, says the FTC: online shopping scams. In most cases, scammers advertise products for sale — and when you make the purchase, either directly through a social platform or after following a link to a bogus website, the items never arrive.

The next-most common scams are fake investment opportunities, which typically involve bogus financial “experts” boasting about their financial success and luring users with promises of huge returns if they send over money.

These have been, by far, the most lucrative for scammers this year, the FTC says — accounting for more than half of people’s reported losses from social media fraud.

When you see somebody on social media telling you how they’re going to make you money, they’re lying.

Mark Cuban

Last month, billionaire investor and entrepreneur Mark Cuban — who recently fell victim to a $900,000 crypto scam — warned his TikTok followers to not get sucked in by fake investment experts on social media.

“When you see somebody on social media telling you how they’re going to make you money, they’re lying … If they were really that good, they would be making themselves rich and not sharing [their strategy],” Cuban said.

Investment scams are followed in frequency by romance scams, where fraudsters try to form online romances with strangers before asking for money. Romance scams pulled in nearly half a billion dollars in the U.S. last year, NBC News reported in July.

7 red flags to look out for

Here are some of the biggest warning signs to look out for, so you can avoid falling victim to social media scams:

  • You get an urgent message from a friend with an emergency request. Often, scammers take control of someone’s social accounts and message that person’s friends to say they urgently need money to get out of some sort of jam. Call your friend to find out if they were hacked before sending any money or assistance.
  • Someone you’ve recently met online seems overly eager to establish a friendship or romantic connection. Romance scammers may also insist that they can’t meet you in person, usually with an elaborate excuse like “living or traveling outside the country, working on an oil rig, in the military, or working with an international organization,” the FTC says.
  • Any request involving gift cards, wire transfers or cryptocurrency. Scammers may direct you to send them money in specific ways that make it more difficult for you to get it back, the FTC says.
  • Products sold at huge discounts that sound too good to be true. Bargain-basement prices can lure shoppers to click on malicious links or visit bogus websites advertising fake goods.
  • Typos or strange spellings in account names, bios or website URLs. These are signs of fake social media accounts or websites, especially if they’re trying to impersonate well-known brands or people. Look out for poor grammar and obvious spelling mistakes in account profiles or messages you receive, cybersecurity experts also advise.
  • Promising huge investment return with little or no risk. Always be wary of phrases like “get rich quick.” Anything that sounds too good to be true probably is.
  • They’re rushing you into a decision. Scammers don’t want to give you too much time to reconsider, or consult with someone you trust. They’ll often use urgent, dramatic language, like “a once in a lifetime” investment opportunity that’s only available “right now,” or an emergency situation that can only be remedied by an immediate influx of money.

Other simple ways to protect yourself

Protect yourself by limiting who can see your posts and profile information, says the FTC. Be suspicious of unexpected communications from unknown social media profiles, whether from a person or an organization, especially if they’re requesting personal or account information.

If you’re unsure whether a website or investment opportunity is legitimate, search for the brand or person’s name online alongside words like “scam” or “complaint,” the FTC advises. Check with your state’s attorney general for previously filed complaints, and use financial regulators’ online databases — like the Securities and Exchange Commission’s Investment Adviser Public Disclosure website — to search for investment advisors or brokers.

You raise the bar to the level that the hacker will go somewhere else, most often.

Kyle Hanslovan

CEO, Huntress

Monitor your credit to make sure you haven’t unsuspectingly fallen victim to fraud. Avoid using your debit card for online payments: They typically don’t offer the same sort of consumer protections that come with most credit cards.

Lastly, cybersecurity experts strongly urge using multi-factor authentication on all your accounts. By doing so, “all of a sudden, you raise the bar to the level that the hacker will go somewhere else, most often,” Kyle Hanslovan, CEO of cybersecurity firm Huntress and an ex-National Security Agency hacker, told Make It last month.

Disclosure: NBC and CNBC are divisions of NBCUniversal.

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