Facebook and Instagram have emerged as hotbeds for online shopping scams affecting UK consumers, according to a recent study conducted by Lloyds Banking Group.
In what has been described as the "wild west" for fraud, The Guardian details in a report that these social media platforms account for over two-thirds of such fraudulent activities, as unveiled by the research reported in The Guardian.
Purchase Scams Prevalent on Facebook and Instagram
Lloyds' estimates paint a concerning picture, revealing that a purchasing scam originating from either Facebook or Instagram ensnares a UK consumer every seven minutes, resulting in a tremendous cost of over £500,000 per week.
Consequently, the banking group is now urging tech giants, including Meta, the parent company of both platforms, to take responsibility and contribute to refunding innocent victims of scams.
This development signifies a notable escalation in the tension between UK banks and tech firms, particularly Meta, which owns not only Facebook and Instagram but also WhatsApp.
Similarly, the US FTC has reported that social media was once a preferred location for con artists. In 2021, more than 95,000 individuals reported losses of approximately $770 million due to fraud initiated on social media platforms.
Banking Institutions Against Social Media Scams
A few weeks ago, UK Finance, the banking industry body, accused social media companies of profiting from scams on their platforms and called for them to reimburse victims.
Criminals are taking advantage of the surging popularity of online shopping by offering nonexistent goods and services at discounted prices or claiming to possess rare items. According to the same UK Finance report, a staggering 78 % percent of these scams are done thru social media.
These fraudulent schemes are predominantly advertised through social media, with victims often instructed to transfer money directly into another bank account via bank transfer, thereby exposing themselves to financial loss.
Why Users Fall for Scams
Lloyds emphasized that many users struggle to distinguish between authentic user-profiles and advertised items, rendering them easy targets for scammers. Clothing, trainers, gaming consoles, and mobile phones are the most frequently misrepresented goods.
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Based on reported cases among its 25 million-plus retail customers, the banking group's research reveals that 68% of all purchase scams originate from Facebook (including its Marketplace) and Instagram, resulting in approximately 40% of the total monetary losses associated with this scam.
Combining their findings with the latest industry data, Lloyds estimates that UK consumers are losing over £27 million per year due to purchase scams from these two social media platforms alone.
Recently, TSB revealed that Meta-owned sites and apps accounted for 80% of cases within the bank's three largest fraud categories: impersonation, purchase, and investment. Specifically, the firm saw a 300% increase in WhatsApp scams and also reported that Facebook Marketplace purchase scams doubled.
Meta's Response
In response to these allegations, Meta acknowledged the pervasive nature of fraud and scams across the industry.
The company emphasized its commitment to protecting individuals from falling victim to these criminals, implementing systems to block scams, requiring financial services advertisers to be authorized by the Financial Conduct Authority, and conducting consumer awareness campaigns to educate users on identifying fraudulent behavior.
Users can also conveniently report suspicious content, and Meta collaborates with law enforcement agencies to support investigations.
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