The FTC Says the Scammers Use Social Media and They Want to Know How Social Media Companies are Screening Ads

Mark Hake

The Federal Trade Commission (FTC) today issued "orders" to eight social media and video streaming platforms, such as Tik Tok, Twitter, SNAP, etc. They are seeking info on how these sites protect consumers by screening for scammers.

The FTC wants to know how these social media and video streaming firms ensure consumers can identify the scammer ads as advertising.

Here is what Samuel Levine, Director of the FTC’s Bureau of Consumer Protection said:

“Social media has been a gold mine for scammers who tout sham products and other scams that have cost consumers enormously in recent years.”
“This study will help the FTC ensure that social media and video streaming companies are doing everything they can to keep scammers and deceptive ads off their platforms.”

The agency wants to know if these companies use human review or if they just have an automated process of checking ads for scammer content. They also want to know what policies and procedures these companies have to root out scammer content as well as deceptive ads.

Scams, Theft, and Social Media

The FTC says consumers got swindled for $1.2 billion in 2022 from deceptive ads, sham products, and outright theft.

The FTC has a separate database tracking the sources of online fraud.
FTC database on online fraud sources.Photo byFTC database

The data above from the FTC public database shows the various sources of online fraud. Email is at the top but websites or apps and social media apps are in the middle.

However, the chart below shows that social media is the top method that people are actually losing money from scams once they have been contacted.
Social media scammer contact leads to lossesPhoto byFTC database

The eight companies are Meta Platforms, Inc.; Instagram, LLC; YouTube, LLC; TikTok, Inc.; Snap, Inc.; Twitter, Inc.; Pinterest, Inc.; and Twitch Interactive, Inc.

Reuters reported that none of the eight companies immediately responded to the FTC orders. The news agency also said that the FTC had asked Twitter to turn over some internal communications earlier this month. This was related to an investigation into Elon Musk and other detailed information about business decisions.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ

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