The Federal Trade Commission (FTC) just revealed US consumers lost a whopping $770 million to scammers on social media in 2021.
For comparison, that number is 18 times larger than it was in 2017 — a massive increase, and around one fourth of all reported fraud losses in the year.
The sudden rise of successful online fraud has plenty of causes, from new trends like cryptocurrency to the pandemic, which has packed more people into online spaces than ever.
The FTC's Findings
It's not just the dollar amount that's up. In 2021, the number of people who reported money lost to fraud was north of 95,000, more than double the year prior.
Perhaps unsurprisingly, the biggest money losses from individual scams were from fraudulent investments, with romance scams close behind.
But the most frequently used type of fraud was the online shopping scam, the FTC reports:
“Most of the reports about online shopping scams involved someone who ordered a product they saw marketed on social media that never arrived. Consumers who listed the social media platform where the undelivered products were marketed most often named Facebook or Instagram.”
Social Media Is Where We Live
Why has scamming surged so strongly? Some might point to new opportunities to fleece newcomers, such as cryptocurrency or NFT fraud. But the best reason is likely the simplest one: We're just all spending far more time than ever before online and on social media — and scammers will always be found where the most potential victims are hanging out.
The data backs this theory up. One global study covering 25,000 people confirmed that social media engagement grew significantly across several early stages pandemic, with web browsing increasing by 70% and social media engagement increasing by 61% above normal usage rates.
“I’ve never seen anything like this before,” Mark Zuckerberg told the New York Times, discussing the strain to Facebook in the pandemic's early months. The shift to social media is here to stay, and so are the potential pitfalls.
Don't send money to someone you haven't met in person, the FTC warns. And consumers should be wary of any unknown stores marketing on social media like Instagram or Facebook — try googling the store name along with a key word like “scam” or “complaint.”
Small business owners, meanwhile, might benefit from an ecommerce website, as it comes with its own url and makes for a more permanent online storefront than the scam-friendly social media-only stores that can come and go quickly.
We've researched the best ecommerce website builders, if you're looking to invest in one. Whatever you do, don't pay for one you find on a Facebook ad — you might wind up on the FTC's list next year.