Social media replaces cold calling as fraudsters target a younger audience
Frequent headlines highlight the perils of fraud, from misleading pension advice to identity theft. Reports are often focused on scams impacting the older generation, however, studies indicate social media is providing a platform for fraudsters to connect with a younger market; unsolicited marketing via social media is the ‘cold calling’ of the digital age.
High risk areas
Two high risk areas are identity theft (including social identity theft) and the promotion and sale of binary products via social media platforms such as Facebook.
With three pieces of information, a fraudster can imitate your identity. Your name, your date of birth and your address provide all the background required for someone to dig you into a financial hole, one you will only learn about when bills start to arrive. Seemingly innocent moments, such as a friend wishing you happy birthday on Facebook, may make valuable information public. Similarly, ‘friend/connection requests’ from strangers could be fraudsters learning about you before embarking on social identity theft. The New York Times printed an article in January 2018 on social identity theft and the numerous (apparently millions) of Twitter accounts run by ‘bots’ (false accounts run by ‘robot’ algorithms). Many are simple and benign (e.g. existing only to follow other accounts in order to boost follower counts), but a certain proportion are carefully copied from real, often dormant, accounts. The new account uses the real person’s photo, likes and dislikes, home town, etc. and promotes a range of products, from investment opportunities to X-rated materials (with various untold implications for the real owner).
The sale of binary products (a form of betting on fixed odds) is rife on social media and evidence confirms scammers have found a ripe market. The FCA reported that in 2017 an average of £87,410 was lost daily to binary scams. The regulator highlighted those under the age of 25 are six times more likely to trust and invest than over 55s when these investments are marketed via social media; often the investment ‘opportunity’ is accompanied by images of luxury items such as watches or cars, to draw a user’s interest (a technique known as ‘click-baiting’). Comprehensive financial advice should be sought before making investments, regardless of where they are promoted.
So what can we do?
As with most things, prevention is better than cure; recovering your reputation or money lost to online scams can be difficult but safeguarding against these scams should be relatively easy. To protect your identity, keep privacy settings and those you connect with online stringent and limit the information you share online. To protect your assets, if an unsolicited investment opportunity presents itself online, particularly if lucrative rewards are promised, turn away or, if you are determined to consider the opening, pursue with extreme caution and double check that the adviser (promoter) and the product they recommend are regulated by the FCA; if not, it just isn’t worth the risk.