Consumer losses to social media scams nearly tripled last year

Consumers reported losing about $770 million in 2021 to fraud scams started on social media, according to a report by the Federal Trade Commission. In total, the FTC found that social media fraud losses made up almost a quarter of all reported fraud losses in 2021. The $770 million in consumer losses reported in 2021 was nearly triple the $258 million reported for 2020. In 2021, nearly half of all fraud reports were for online shopping scams. In nearly 70% of shopping scam reports, customers said they had placed an order, usually after seeing an ad, but never got the product. A vast majority of these scams occurred on Facebook or Instagram. The report’s findings highlight the worst-case scenario for consumers. In recent months, social media platforms have been adding more features to encourage customers to buy products on their apps, giving brands ways to further connect with their fans through a more complete shopping experience. Don’t miss the latest news. Sign up for Ad Age newsletters here. The report found that 18 to 39-year-olds, the target audience for many brands looking to sell on social media, were more than twice as likely as older adults to report losing money to these scams, which could deter them from buying from a social media app in the future. The largest chunk of monetary losses came from investing and cryptocurrency scams, which accounted for over $284 million, with more than half of the scams starting on social media. Reports to the FTC show scammers used social media to promote bogus investment opportunities, and even to connect with people directly as “friends” to encourage them to invest. The second most costly scam category was romance scams, usually starting on Facebook or Instagram. Reported romance scams racked up $184 million in social media fraud losses, the report showed. The FTC advises users to opt out of targeted advertising if possible, and to call any friends who are asking for money, especially cryptocurrency. It also suggests consumers search online for a brand name plus “scam” or “complaint” before buying through social media. All of the major social media platforms have ways of reporting accounts for scams. Subscribe to Ad Age now for the latest industry news and analysis.

Consumer losses to social media scams nearly tripled last year

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