Social Media Scams

July 26, 2022

The internet and social media have greatly expanded access to information, connectedness, and with that an increased possibility of getting scammed. As you scroll through your social media feeds and direct messages, it’s easy to misconstrue ploys to get your money. Various scams disguised as legitimate opportunities to make money yourself or to help a worthy cause continue to increase.

In 2021 alone, the FTC reported¹ that 95,000 people lost approximately $770 million to social media scams, and all signs point toward that not slowing down. There are several things to be wary of when you're scrolling through social media to protect yourself against scams.

Be suspicious of people with pictures of cash and lavishness. Many social media platforms, particularly Instagram, are known for promoting lavish “lifestyles,” typically filled with boats, mansions and piles of cash. If you are following people to see a glimpse of the high life, do so. But you should start to be suspicious if these fortunate people you’re friends with or follow on social media start talking to you about financial advice, business ventures or asking for money. Why, after all, would people already so fabulously wealthy need anything from you? Often, displays of cash and assorted luxury items are designed to project an image rather than a reality – sometimes benign, but occasionally aimed at stealing your money and making your own life poorer.

Ignore requests for money. More often than not, they’re probably internet scams. Do not respond to anyone who specifically asks you for money via social media (or email or any other online platform, for that matter). These scams can come as “investment opportunities” (about which the British government specifically warned² earlier this year) that ask you to send a little money now to reap big rewards later on. Another popular scam is when you’re informed you’ve won a sweepstakes contest that you never entered, and that you need to pay to claim your prize. Having to send money to make money is usually a scam. Don’t fall for it!

Strangers offering you money Similar to those asking you for money, if someone offers you cash unprompted, it’s likely a scam, too. It is not common to be contacted by a business or person through social media offering to pay for your personal expenses. Although it may seem like a gift with no strings attached, all too often the gifter usually asks for something in return. The "gifts" are usually in a check form that you are asked to deposit and then forward a portion of the proceeds back to the gifter. Remember, the account the transaction is taking place in is in your name, and when/should the item return, you are left responsible for any negative balance.

Beware of “pump and dump” scams. We’ve covered the less subtle scam centered on making money as an investor, but what about when you’re solicited about buying stock in an actual company? “Pump-and-dump” scams occur when brokers hype up the potential of a (usually cheaply priced) listed firm to inflate the value of stock before selling their outsized shares; these pre-date social media and the internet itself. But in an era when people spend a good part of their time on social platforms, unscrupulous brokers have a new outlet for furthering these schemes. If someone – even a licensed broker or financial advisor – contacts you through social media about buying stock, it’s a good idea to be suspicious. Leave advice about investing to advisors³ who you know are working for you.

Keep personal details to a minimum. People love to post on social media about their kids, pets and other aspects of their personal lives. But this is also a great opportunity for scammers to glean valuable information. According to a recent report⁴ by Santander Bank, millennials in particular put themselves at risk by “oversharing,” with such information as pet names or dates of birth, sometimes equipping fraudsters with what they need to hack into bank accounts or apply for financial products like loans in their name. These scams are more dangerous than the others because they involve identity theft rather than directly convincing you to hand over money, so make sure you’re extra vigilant!

Social media is a great way to both stay in touch with friends and meet new people. But it could be damaging financially to be over-trusting. Keep these tips in mind and hopefully you’ll never be on the receiving end of a social media scam.

Having a trusted financial partner is essential to protect you and your loved ones from fraudulent and risky behavior. Our team is here to make sure your goals remain on track.

This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments.

1. Retrieved from: https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2022/01/social-media-gold-mine-scammers-2021
2. Retrieved from: https://www.actionfraud.police.uk/news/instasham-fraudulent-investments-being-advertised-on-social-media
3. Retrieved from: https://www.affinityfcu.com/business-banking/investment-professionals-overview
4. Retrieved from: https://www.cnbc.com/2019/07/22/millennials-at-risk-of-fraud-over-instagram-pet-pictures-santander.html