The United States of America’s Federal Trade Commission (FTC) released a report earlier this week that shows a massive uptick in social media scams in 2021. The report said that fraud on social media soared to US$770 million from the US$258 million that was recorded in 2020.
For scammers, there’s a lot to like about social media. It’s a low-cost way to reach billions of people from anywhere in the world. It’s easy to manufacture a fake persona, or scammers can hack into an existing profile to get “friends” to con.
Federal Trade Commission (FTC)
More than 95,000 people fell prey to social media scams with Investment scams accounting for the largest proportion.
More than half of people who reported losses to investment scams in 2021 said the scam started on social media. Reports to the FTC show scammers use social media platforms to promote bogus investment opportunities, and even to connect with people directly as supposed friends to encourage them to invest. People send money, often cryptocurrency, on promises of huge returns, but end up empty.
Federal Trade Commission (FTC)
Last year was the year of Bitcoin and other cryptos and with it came the fear of missing out which led many to get unwittingly involved in bogus investment scams. The FTC data was mainly from Facebook and Instagram. And the only recommendation the FTC gave was that people opt out of targetted advertisements. The reason behind this is that ads have been used by fraudsters to target people based on their buying patterns, age interest etc.
Much the same in Zimbabwe and Africa
These figures are for the US but paint a dismal picture because locally we are all too aware of the number of scams that have been propagated on social media and the most popular messaging app in the country WhatsApp. One of the biggest problems is that many of these scams in Zimbabwe go largely unreported or if they are reported not much can be done about it. 2021 saw Zimbabweans lose upwards of US$30 Million to Ponzi schemes, investment fraud and other scams.
“At least 10,000 complainants reportedly lost over US$30 million between them. We have handled some 892 such cases involving thousands of complainants. The scammers quickly disappear after swindling the unsuspecting investors. Millions of dollars were lost, some lost houses while others committed suicide upon discovering they would have been duped. We have handled suicide cases related to Ponzi schemes”
ZRP Assistant Commissioner Paul Nyati (via The Herald)
Last year we also bore witness to the reported “US$100 million EcoCash scam” that started in WhatsApps with people’s SIM cards being hijacked and fraudsters appealing for help in family or WhatsApp friend groups. The imposters would then disappear once the funds had been transferred. For the poor soul who had their sim hijacked they would lose signal and be none the wiser. The jury is still out on the amount lost because the reports at the time quoted the figures in local currency.
On the continent who can forget what was probably the story of the year that involved two South African brothers Raees and Ameer Cajee who disappeared with 69,000 Bitcoin worth US$2.2 billion at the time. They were able to do this through a company they had set up called Africrypt which promised investors 2-11% returns depending on the portfolio that the customer chose.
Circling back to Zimbabwe, most company’s especially EcoCash warned customers over the year of investment scams that they had heard were operating on their platform.
It’ll be interesting to see when data becomes available for Zimbabwe and the rest of Africa. The information that those reports contain could help many local authorities and individuals see the trends happening elsewhere which help in anticipating what opportunists could try locally.