FTC warns of ‘staggering’ losses to social media scams since 2021

The Federal Trade Commission says Americans have lost at least $2.7 billion to social media scams since 2021, with the actual number likely many times larger due to severe under-reporting. 

A recent study reveals that only 4.8% of scam victims filed complaints with either the Better Business Bureau or a government agency.

"Reported losses to scams on social media during the same period hit a staggering $2.7 billion, far higher than any other method of contact," said Emma Fletcher, a Senior Data Researcher at the FTC.

"And because the vast majority of frauds are not reported, this figure reflects just a small fraction of the public harm."

In social media scams, fraudsters often advertise fake products, trying to trick potential victims into making payments. Subsequently, these crooks make off with the money without actually delivering on their promise.

Alternatively, they might entice individuals with false investment opportunities, frequently related to cryptocurrency. Another tactic involves sending unexpected friend requests, posing as romantic prospects, only to later solicit money from their targets.

The FTC advised U.S. consumers today to exercise caution and safeguard themselves against such scams, encouraging individuals at risk to restrict their social media posts and contacts, reaching out directly by phone if someone, even a purported friend or relative, solicits money through social media.

Americans were also urged to exercise caution if someone on social media pushes for friendship or romance out of the blue. In such cases, it's advised to exercise caution, read about romance scams, and refrain from sending money to individuals not met in person.

Additionally, consumers should research companies thoroughly before making purchases since online searches using a company's name and keywords like "scam" or "complaint" can provide valuable insights.

"Reports during the first half of the year show that the most frequently reported scams on social media are related to online shopping, with 44 percent of reports pointing to fraud related to buying or selling products online," the FTC said.

"Most of these reports come from people who never received the items they ordered after responding to an ad on Facebook or Instagram."

Today's warning follows an FTC report regarding a surge in social media fraud during 2021, when Americans lost over $770 million in a single year, according to more than 95,000 reports.

That amounted to a massive 18-fold increase over 2017 losses and more than double compared to those reported during 2020.

In February, the FTC said U.S. consumers lost a record $8.8 billion to various types of scams in 2022, after a massive increase of over 30% in fraud losses compared to the previous year.

At the time, the agency revealed that roughly 2.4 million Americans reported financial losses due to scams last year, with a majority falling prey to impostor and online shopping scams in 2022.

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