Social Media Hotbed For Investment Scams, Romance Scams And More
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According to the Federal Trade Commission (FTC) more scams in the United States are started on social media than anywhere else at a cost of 1.9 billion dollars in 2024 and that figure is probably low because many victims, often out of embarrassment, do not report being victimized.
A study done by the Fin Tech company Revolut found that 60% of all scams in the UK originated on the Meta platforms Facebook, Instagram and WhatsApp with investment scams being the most common form of scam. Woody Malouf, Revolut's head of financial crime section said that Meta's platforms were 'being used as a hotbed for scams.'
The most common types of scams originating on social media are online shopping scams, investment scams and romance scams which are often based on our trusting the people we encounter as friends on social media. Remember my motto, "trust me, you can't trust anyone." Frequently, social media accounts are hacked or cloned and the scammers, posing as your friends, leverage the trust that you have in your friends to lure you into phony investments, phony sales and romances. Further, even if a communication on social media comes from a real friend, that friend may be forwarding scams that they have been fooled into thinking are legitimate. Scammers use AI to harvest information about you that you post on social media to learn about your identity and interests and use that information to target you with a wide variety of scams.
According to an investigation done by the Wall Street Journal, Meta with its 3 billion users is increasingly a cornerstone of the internet fraud economy. Meta accounted for almost half of all reported scams on Zelle for JPMorgan Chase between the summers of 2023 and 2024. The Wall Street Journal investigation noted that Meta's advertising revenues increased by 22% in 2024 to more than $160 billion and the company has been hesitant to add scam prevention measures for its ad-buying clients. The investigation referred to internal documents at Meta showed the company allowed advertisers to accrue between 8 and 32 automated 'strikes' for financial fraud before it banned their accounts.
Making the matter worse, Meta's advertising algorithms and tools enable scammers placing paid for ads on Meta's platforms to specifically target their victims, such as older users with health scams, men between the ages of 25 and 45 with investment scams particularly those involving cryptocurrencies, and fans of celebrities with AI deepfake celebrity endorsement scams. For example, AI deepfake technology has been used to make it appear that Warren Buffet, Elon Musk, Andrew Sorkin and other public figures were promoting phony investments.
Recently, 42 state attorneys general sent a letter to Meta urging it to take stronger action to reduce investment scam advertising appearing on Meta's platforms The attorneys generals recommended that Meta improve its ad review process and even stop taking investment advertising until better protections were in place.
While Meta says it is taking actions to reduce fraud, its actions speak louder than its words. According to the WSJ investigation, Meta deprioritized scam enforcement and abandoned plans for advertiser verification requirements similar to what it mandates for political ads.
Meta has further taken the position in Motions to Dismiss in various cases that Section 230 of the Communications Decency Act of 1996 provides that it has no duty to take any actions to reduce fraudulent advertisements placed by third parties on its platforms and cannot be held responsible for advertising placed by third parties on its platforms.
This argument has been unsuccessful, most recently in a Motion to Dismiss a lawsuit brought by Australian billionaire Andrew Forrest who sued Meta following its failure to remove fraudulent investment ads using his image and AI cloned voice.
Meanwhile, here are some things you can do to protect yourself from becoming a victim of a social media scam:
Don't accept friend requests from everyone who asks to be your friend on social media and don't trust communications on social media merely because they appear to come from your friends. Recognize that personal information you post on social media can be harvested to target you for scams based on your interests. Use your privacy settings to limit who can see the information you post on social media. Remember it is good rule to never click on links that may appear on social media, text messages or emails unless you have absolutely confirmed that they are legitimate. Never invest in anything you do not fully understand and never invest unless you have vetted both the investment itself and the person or company offering it. Finally, B.S. Be skeptical whenever an offer of anything too good to be true appears on your social media.
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