Social Media Scams Cost Consumers $2.7B, Study Shows

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Scams originating from social media have accounted for $2.7 billion in reported losses since 2021, more than any other contact method, according to recent data from the Federal Trade Commission (FTC).

During the first half of 2023, 44% of reported scams on social media were related to online shopping, with most people reporting that they never received an item that was ordered after clicking on an ad on Facebook (60%) or Instagram (24%), the FTC said.

While online shopping was the most commonly reported scam on social media in the first half of 2023, the largest scam in terms of total dollars lost related to bogus investment schemes. These accounted for 53% of all the money reportedly lost. Cryptocurrency was a top mention when it came to the bogus investment schemes as more than half of the reports showed that consumers paid the scammers using cryptocurrency, the FTC said.

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Romance scams rounded out the top-three most popular social media scams in the first half of 2023 and was the second-largest scam in terms of total dollars lost. Half of the people who reported losing money to an online romance scam said it began on Facebook (21%), Instagram (21%) or Snapchat (8%).

Romance scams “often start with a seemingly innocent friend request from a stranger followed by love bombing and the inevitable request for money,” the agency said.

Here's how can you protect yourself

The FTC provides four ways to steer clear of social media scams, beginning with placing limits on who can see your posts and information on social media. You can visit your privacy settings to set restrictions.

Second, if you get a message from a friend about an opportunity or urgent need, pick up the phone and give them a call. Their account was likely hacked.

Third, if someone appears on your social media and quickly attempts to start a friendship or romance, slow it down, read up on romance scams and never send money to someone you’ve never met in person.

Lastly, before you make a purchase online, check the company out by, for example, doing an online search using its name plus “scam” or “complaint.”

To learn more about how to spot, avoid and report scams, or on steps to help you recover money you’ve lost to a scammer, visit ftc.gov/scams. And if you spot a scam, you can report it to the FTC at ReportFraud.ftc.gov.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.