Scams that originate on social media, from fake Instagram Shops to false online romances that lead to extortion, ballooned between 2020 and 2021, according to a new report from the Federal Trade Commission. Targeted advertising looks like it has something to do with it, the agency said.
Bad actors can “use the tools available to advertisers on social media platforms to systematically target people with bogus ads based on personal details such as their age, interests, or past purchases,” the FTC said in its report.
Consumers should protect themselves by limiting who can see their posts and information, as well as checking to see whether they can opt out of targeted advertising, the FTC said.
The suggestion that social media users eschew targeted advertising perplexes some who work in the advertising industry and at antifraud organizations.
“Turning off personalized ads settings in social platforms is a terrible idea,” said Wayne Blodwell, founder and chief executive of TPA Digital Ltd., a digital advertising consulting firm. “Users have a far more enjoyable experience with social platforms when the ads, which fund the platforms, are relevant to them, and scammers can easily scam without using targeted ads.”
Many platforms’ most-stringent privacy settings still allow advertisers to target users based on some basic data, and bad actors can and do target users indiscriminately, without the need for any personal “hook,” said Mason Wilder, research manager at the Association of Certified Fraud Examiners.
“I can say with quite a bit of confidence that opting out of targeted advertising, to the extent that you’re even able to on these platforms, is not going to protect you from scam ads,” Mr. Wilder said. “The best thing you can do is make yourself aware of the different types of scams and red flags of scams, and have a healthy skepticism of everything that you see on any social media platform, especially if it’s an advertisement.”
Reports of losses to fraudulent schemes initiated on social media more than doubled, to 95,000 in 2021 from 46,000 in 2020, the FTC said in its report
Consumer complaints amounted to total losses of around $770 million, up from $258 million in 2020. The published data suggest that social media was a more profitable medium for scammers in 2021 than other means of duping people into parting with money such as email and phone schemes, which in 2021 made scammers at least $554 million and $546 million, respectively, the FTC said.
Although romance and investment scams claimed the largest amount of money, the highest number of scam reports to the FTC came from those who said they were defrauded trying to buy something they saw advertised on social media. In nearly 70% of those reports, people said they placed an order, usually after seeing an ad, but never received the product, the FTC said.
Some complained of ads that impersonated real online retailers and drove people to fake websites that looked like the real thing. Nearly nine out of 10 consumers who named a platform where they were targeted with shopper scams identified Meta Platforms Inc.’s Facebook and Instagram, the commission’s report said.
Meta puts significant resources toward tackling fraud and abuse, a company spokeswoman said.
“We take legal action against those responsible when we can and always encourage people to report this behavior when they see it,” she said.
Meta has gotten better at understanding the common traits of fraudulent ads, and as a result is improving its automated detection systems and the processes of its human reviewers, the spokeswoman added.
The IAB Tech Lab, a nonprofit that develops technology and standards for the online advertising industry, said it has built tools that let bona fide advertisers authenticate themselves in the plumbing of digital advertising, therefore making it easier for platforms to weed out fraudulent companies.
“Adopting these solutions and addressing this problem does not only go [some] ways in protecting the consumer, but it also protects the advertiser from bad actors using their brand to scam customers and defame their brand image,” said Shailley Singh, senior vice president of product management and global programs at the organization, in an email.
Along with limiting who can see social media activity and opting out of targeted advertising, the FTC recommended slowing down online romances that feel rushed, checking out retailers on a different platform before buying, calling friends who appear to be asking for cash and refusing to send money to strangers.
Write to Katie Deighton at katie.deighton@wsj.com
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