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FTC Validates What We All Sense: Social Media Scams Are On The Rise

On October 21, 2020, the Federal Trade Commission (FTC) posted a data spotlight blog about scams on social media. In the piece, the FTC data demonstrates a positive correlation between scam reporting and pandemic activity. The Consumer Sentinel Network is a cyber investigative tool made available to US government agencies to gain access to many reports made by consumers to the FTC related to scams, fraud, identity theft, and any crime involving improper business practices and schemes. Investigators can use this tool to measure loss and quantify the impact scam activity has on American citizens.

In 2019, reports of loss from fraud originating on social media reached $134 million. Within the first 6 months of 2020, this reported number rocketed to $117 million. 

Figure 1: FTC Scam Report Sourced from FTC Report Detailing COVID-Related Consumer Loss from Social Media Scams

Top Social Media Scams Reported by FTC

According to the FTC, the four most reported scams are online shopping, romance, income opportunity, and social relief scams. Online shopping scams usually refer to an illegitimate shop offering desirable brand products via social media. Fraudsters then trick victims into paying for products that are counterfeit or never delivered. For example, a naive consumer may order a designer purse at a low price only to receive a cheap knock-off.

Figure 2: Online Shopping Scam Example

Dropshipping scams are another common tactic used by cybercriminals. Dropshipping is a legitimate business model, where online retailers can be a middleman and sell items that they don’t stock in store. Dropship scam stores often sell a product to the victim at low prices without ever fulfilling their obligation to ship the victim their inventory. In one FTC complaint, a charge was brought to a dropship coaching company for faulty business practices

The next scam, Romance scams, have been plaguing the US for years. Romance scams caused a loss of $475 million to consumers in 2019 alone. They are so effective that the FBI has a page dedicated to educating people about them, and it also serves as a portal to report potential romance scams. According to the FTC report, most romance scams reported to their agency started with a Friend Request or a message on social media. Romance scams typically target people who are on dating sites, and they have been effective against seniors (55+). 

Income opportunity and relief scams have been around for a number of years on social media and have been widely reported by ZeroFOX. In these scams, posts on social media are made to hashtags and profiles that promise a “quick turnaround” of money for an initial deposit. For example, Money Flipping scams promise victims quick returns on their deposits to the scammer, but once the deposit is made the scammer disappears or blocks the victim. 

Figure 3: MoneyFlipping Scam on Instagram

Income opportunity and relief scams can also result in a victim falling prey to a 419 or Advanced Fee scam. In this example, fraudsters send a wire transfer or an invalid check to a victim and ask the victim to route a portion of the money to an attacker-controlled account. Within days, the wire transfer bounces, and the victim loses the money they routed afterward. Sugar baby scams, for example, are a combined income opportunity and advanced fee scam. 

Figure 4: Sugar Baby Scam

ZeroFOX Social Media Scam Data

When comparing the FTC report to ZeroFOX data, we’ve seen a positive correlation between the increase in reported scams to the FTC and an increase in scams found across all of our data sources.

Across industries in the ZeroFOX ecosystem, we’ve seen a 519% year over year increase in security incidents specifically related to scams. A further breakdown of customer cohort scams include:

  • 423% increase in Financial Services (scammers/money mulers targeting banking customers)
  • 1579% increase in Retail scams
  • 226% increase in Consumer Goods scams

And specific scam types:

  • 295% increase in HR scams, which could align with scammers looking to capitalize on work from home opportunities and lay-off/furloughs due to the pandemic
  • 164% increase in crypto giveaway scams, where an account is taken over or an impersonator profile is created to look like an influencer to peddle the scam
  • 609% increase in money flipping scams
  • 100% increase in impersonating profiles that have someone who claims to work for a company in HR, but does not

Related remediation activity has grown significantly as well. Across all industries, ZeroFOX has seen a 94% YoY increase in scam takedowns submitted and then subsequently removed. 

Scam Trends to Watch Out For

ZeroFOX Alpha Team assesses that scammers will likely continue to use the pandemic as an opportunity to take advantage of desperate consumers. Emotional and economic distress can leave victims vulnerable to these scams, especially ones designed to alleviate stress and reduce the impact of the pandemic. Alpha Team also assesses that the scam types will remain constant and we will not see many new scams, mostly due to the years of experience and resources available for tried and tested scams. The old adage “don’t fix what isn’t broke” applies to bad actors as well. As always, be mindful when using social media for business or for personal use to prevent yourself from becoming the next victim to a social media scam. 

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