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The rise of social media shopping scams targeting young adults

The rise of social media shopping scams targeting young adults

May 22, 2023

Scammers targeting money and credit-card details are increasingly exploiting young people through social media platforms.

In November, Jessica Longoria came across an advertisement for shoe-organizing boxes while scrolling through TikTok. The ad claimed that the clear plastic containers were on sale for a limited time. Intrigued, she visited the website and ordered a 36-pack for $45.

However, when the package arrived in late December, it contained only one large plastic bag. Frustrated, Ms. Longoria took to TikTok to express her disappointment. Several others also created TikTok videos alleging they were scammed by the same ad, resulting in a collective viewership of 32 million.

Despite attempting to contact the seller via the provided email address, Ms. Longoria received no response. Even our repeated email attempts and website visits were met with silence or an apparent offline status.

A TikTok spokesperson confirmed that the seller is no longer permitted to advertise on the platform, stating that TikTok removes content violating their community guidelines, advertising policies, or terms of service.

According to the Federal Trade Commission (FTC), online shopping is the most common type of fraud, with scams often originating from social media. Reported losses from social media fraud surged to over $1.2 billion in 2021, a significant increase from $42 million in 2017. For individuals aged 18 to 29, social media platforms accounted for nearly 40% of reported fraud losses last year, as per the FTC.

Christine Halvorsen, a managing director at Protiviti, a risk and compliance consulting firm, highlighted that "Gen Z has grown up with a phone or iPad in their hands," making them comfortable with online purchases and more trusting of such transactions.

In March, the FTC issued orders to major social media companies, including TikTok and Meta Platforms Inc. (the parent company of Facebook and Instagram), seeking information on their advertiser vetting processes. Both TikTok and Meta stated their cooperation with the FTC's order and emphasized that their existing safeguards catch the majority of threats.

Reflecting on her experience, Ms. Longoria admitted that she had not heard of the company advertising the shoeboxes. However, the video ads had appeared convincing. She managed to recover her $45 by filing a claim with Apple since she used her Apple Card for the purchase.

This incident taught her to approach ads on social media with greater skepticism. She stated, "I would definitely second-guess any kind of trendy ads on TikTok unless it's from a super verified, super well-known company."

While younger people tend to report lower monetary losses from scams compared to older adults, who are more susceptible to phone scams involving tech support, sweepstakes, or impersonations of friends and relatives, experts studying online fraud highlight that there is typically a larger scheme at play. Halvorsen noted that scammers using social media ads are often part of organized criminal enterprises focused on data theft rather than profiting from small purchases. They may utilize shoppers' credit card information to purchase gift cards or cryptocurrency or sell their credit card details, names, and addresses.

The FTC identifies online marketplaces as significant venues for shopping fraud. Elly Sloman's experience exemplifies this. She attempted to buy a PlayStation through Facebook Marketplace, where she found a PS4 Pro listed for $300. Despite feeling uneasy immediately after the purchase, she completed the transaction through Facebook Messenger using Meta Pay, the platform's payment system, tied to her debit card. Unfortunately, the seller blocked her on Facebook, rendering communication impossible. As per Facebook's purchase protection policy, disputed purchases made through Facebook Messenger or other messaging services, local pickups, or third-party sites are not covered. To request a refund, buyers must have tapped "Buy Now" on the listing.


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