Consumer Protection Laws and Social Media Scams

ScamConsumer protection laws discourage businesses from cheating their customers, but they do little to protect consumers from scammers who prey on internet users in search of a bargain. Every consumer should be wary of getting something for nothing.

One of the latest scams involves fake coupons offered on Facebook and other social media sites. Scammers purport to offer valuable coupons that can be redeemed at stores like Lowe’s, Home Depot, Amazon, and Costco. Consumers who try to get a coupon get nothing but headaches.

Here’s How the Scam Works

One recent example of a social media scam involves an apparent Facebook advertisement that offers a $100 coupon at Lowe’s. A condition of receiving the coupon requires Facebook users to share the advertisement on their own Facebook pages. That allows the scam to reach a wider audience.

The Facebook user is then asked to fill out a survey. Consumers should be concerned by surveys that ask for personally identifying information (such as a date of birth) and should close the page when the survey asks for credit card information, but the advertisement appears to be legitimate, so some consumers provide the requested information.

Instead of receiving a coupon or gift card, consumers who complete the survey receive additional offers that attempt to steal more information. They also find themselves victimized by identity theft and credit card fraud.

The Rising Tide of Facebook Scams

An Australian consumer protection agency recently reported that worldwide social media scams are at an all-time high. Some are harder to police than others.

Romance scams prey on lonely people who are asked to send money to a Facebook friend who pretends to be in love with them. Fake trader scams purport to sell quality merchandise at a discount, but they are either selling cheap imitations or they don’t fill the order at all. Other scams promote fake contests or offer “free” trials of products that cannot be cancelled before the consumer is billed.

Another scam offers government grants. The recipient of the message is assured that the grant will be directly deposited into the recipient’s checking account. Instead, the scammer uses the checking account information to empty the account.

The majority of social media scams occur on Facebook. If the scammers paid Facebook for advertising, Facebook might be held responsible for failing to police its advertisers. Instead, scammers set up their fake coupon and fake trading schemes to make them appear to be Facebook advertisements, but they really aren’t.

Facebook and Consumer Protection

The European Union has been more aggressive than the United States about protecting consumers from social media scams. Some of its actions are likely to benefit Americans. For example, the EU is requiring Facebook and other social media sites to label advertising more clearly so that consumers can easily tell the difference between a fake ad and a real one. The EU also wants social media sites to remove fraudulent posts. It is threatening social media sites with stiff fines if they don’t develop solutions to the problem.

Consumer protection agencies in the United States have been less willing to impose their will on social media sites. That’s unlikely to change in the current anti-regulatory political climate. The Federal Trade Commission (FTC) maintains a Scam Alert page, but it does not help consumers who have been scammed by criminals.

Tips for Avoiding Scams

Social media users can some simple steps to protect themselves from scams:

1. If you see the word “free” in a social media post, move on to the next post. Whether or not you believe the adage that “nothing in life is free,” it is fair to believe that almost nothing offered for free on a social media site is actually free. That’s particularly true when the “free” item has significant value. No company can afford to give away free products or $100 gift cards to all the Facebook users who might share a promotion.

2. Don’t download anything that offers to change the way Facebook works, including adding a “dislike” button next to the “like” button. Only Facebook can change Facebook, and it changes its site without requiring users to download “add on” products. A Facebook “add on” should be assumed to be a phishing scam, designed to steal your Facebook login or other identifying information.

3. Don’t download apps that purport to interact with Facebook. “Who viewed my profile?” is an example of a fake app that installs malware on the user’s computer. No app allows you to see who viewed your Facebook profile. As with any app, potential users should do some basic research to determine whether the product is legitimate. Googling the name of the app is an easy way to locate reports that identify the app as a source of trouble.

4. Never share personally identifying information or credit card information when filling out a survey. In fact, it is best to avoid surveys altogether.

5. Never click an advertisement on a social media site without first researching the vendor to determine whether it is legitimate. On most browsers, hovering your mouse over the advertisement will display the url to which a click will take you. If the url looks suspicious, don’t click.

6. Set your social media privacy options in a way that protects your private information. For example, don’t display your full date of birth, your address, or your telephone number. Disclosing that kind of information facilitates identity theft.

Of course, advice that applies to browsing in general also applies to social media sites. Change your passwords regularly. Don’t use the same password for every site. Keep your antivirus program and your operating system up to date. Choose a browser that features strong security.

Finally, if you are victimized by a social media scam, you can report it to the FTC. While the FTC does not pursue individual fraud claims on behalf of consumers, it does add verified scams to its Scam Alert page. That may help other consumers avoid being victimized.

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