In 2022, scammers on social media cost Americans $1.23 billion—a 54% increase over 2021, according to the Federal Trade Commission. One key difference with these newer scams: Instead of seeking financial assistance, they purport to offer help.
"As the use of social media has grown and companies have strengthened cybersecurity measures, bad actors are increasingly targeting the emotional vulnerability of individual users," says Peter Campbell, director of financial crimes risk management at Schwab.
Many social media cons start with a fraudster claiming to be a mutual acquaintance of someone in your social network. Once a bond is formed over weeks or even months, they boast of big gains from an investing opportunity and offer you a way in.
Others use the stolen identity of a legitimate financial professional, sometimes setting up a fake website using her or his likeness. For example, in June 2022, the FBI warned of a cryptocurrency scam on LinkedIn in which bad actors posed as reputable financial professionals. After establishing a rapport, the scammers persuaded their victims to invest in what turned out to be a bogus cryptocurrency opportunity.
"It's no longer just a phone call or a phishing email," says Tiffany Wax, a senior manager at Schwab who works with Peter to combat online fraud. They're now using social engineering combined with sophisticated technology, which is a real game changer."
Tiffany and Peter offer a few tips to help social media users steer clear of scams:
- "Be extremely selective about the information you share and the invitations you accept," Peter says. That goes for not only Facebook and Instagram but also professional networks like LinkedIn.
- Vet any new contacts or opportunities carefully—even Googling a name or details of an investment can unearth previous victims.
- And finally: "If you own crypto, never share your private key or private wallet with anyone," Tiffany says. "This may sound obvious, but you'd be surprised how often people are tricked into doing so."
Of course, it never hurts to check with your financial advisor about any new investment opportunities that come your way. Many advisors—including those at Schwab—stay abreast of the latest scams.
"Fraudsters may be growing more sophisticated, but with a little effort you can still stay a step ahead," Tiffany says.
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