The UK fraud and cyber crime reporting centre, Action Fraud, received 5,039 claims of investment scams featuring a social media platform over the last year.
This totalled to £63m ($90m, €73m) lost to fraudsters in the 12-month period.
Among the reports, 45% claimed the “fake commodity” investors were scammed into was a type of cryptocurrency, Action Fraud said.
Instagram was the most referenced social media platform in 35% of reports, followed by Facebook in 18% of cases.
Worryingly, young people seem to be the most targeted group by scammers.
According to the reporting centre, 28% of victims were aged 19-25, 61% of whom were men. By contrast, the average age of scam victims that were not defrauded via a social media platform is 50.
Fake testimonials and celebrity endorsement are increasingly being used by criminals, with Action Fraud receiving 500 reports between April 2020 and March 2021 mentioning them, with losses totalling £10m.
Cloned company investment fraud is on the rise as well, with many investors being contacted on LinkedIn to persuade them the offer is legitimate.
Fear of missing out
Sanjay Andersen, superintendent at the City of London Police’s National Fraud Intelligence Bureau, said: “Reports of investment fraud have increased significantly since the start of the coronavirus pandemic, which is unsurprising when you think the vast majority of us have had to conduct nearly every aspect of our lives on a computer or mobile phone.
“Being online more means criminals have a greater opportunity to approach unsuspecting victims with their scams. We would encourage anyone thinking about making an investment to do their research first. Visit the FCA’s website and check and double check every detail before handing over your money or personal details.”
Myron Jobson, personal finance campaigner at Interactive Investor, said social media scammers leverage victims’ fear-of-missing-out (Fomo) culture which is rife on social media.
“We all have to be on the lookout for this, and social media firms have a big role to play to weed out scam adverts on their platforms. It is all too easy for unscrupulous individuals to promote their scams to the masses, so it paramount that Online Safety Bill puts a legal onus on these companies to do more in tackling the issue.
“Financial companies, charities as well as the regulator have been screaming for the bill to be amended accordingly. The government must now act to pull the plug on social media scammers.”
