While traditionally investment scams have taken place over the phone, via email, or in person, these days, social media is prime territory for fraudsters looking to con people out of their money. In fact, in the United States, social media scams were responsible for the loss of around $117 million in the first six months of 2020.
Instagram is one particular platform where unlucky users have been preyed on by scammers, who take advantage of the social media channel’s 1 billion monthly active users to find potential victims. Those conned are often under 25, students who are struggling with financial instability and are seduced by the ‘get rich quick’ possibility.
In fact, Action Fraud received 164 reports of individuals who had been tricked out of money on Instagram in June 2020 alone. These reports involved a combined financial loss of £358,809.
Instagram scams can include phishing or selling counterfeit goods, but one very common scheme is an investment scam known as “money flipping”. In these investment scams, fraudsters message Instagram users, promoting an opportunity to earn high returns within just 24 hours for a small upfront contribution of a couple of hundred pounds.
These accounts usually feature pictures of the user’s glamorous lifestyle with images of luxury sports cars and expensive watches, plus elaborate backgrounds. When it comes to persuading the user to make an investment, the scammer will promise that they can send research reports and stock tips. They may even have professional-looking websites featuring positive reviews from other investors.
The payment is made via Bitcoin or another cryptocurrency and is supposedly going to be used to trade on the stock market or to buy and trade foreign currency. The scammer will even send the victim images of their profits building up.
But then they’ll ask for more money to be invested. Or they’ll tell the victim that the money can only be released for a fee. After that, the person will disappear, closing their account and ceasing all contact. If the money is sent by bank transfer or via a cryptocurrency platform—which is typically the case—retrieving it is next to impossible.
Sometimes this is followed by another scam promising to get the person’s money back—in return for a fee, of course.
There are also cases of Instagram ‘money mules’ where fraudsters convince victims to launder criminal funds through their bank accounts, persuading them with the promise of a share in the money. Most of the time victims don’t receive anything. Often, they’re also persuaded to hand over their financial details. A third of ‘money mules’ are under the age of 21.
To ensure you don’t fall prey to Instagram investment scams, follow these guidelines: