Social Media Scams Generate Billions in Consumer Losses, Put Business on Alert

• Social media scams cost consumers billions in 2025, according to new FTC data.

• For businesses, the concern goes beyond consumer fraud. Scams can divert customers, damage trust, and create brand-protection headaches.

• The FTC’s findings are a reminder that online advertising, endorsements, influencer marketing, and account security are increasingly part of the same risk conversation.

Social Media gets attention for bringing people together, but for businesses, it’s all about the opportunity to reach a wider audience. It’s great for reaching new customers, building relationships, and strengthening brand reputation. But the platforms that help legitimate businesses grow have also become powerful tools for scammers.

The Federal Trade Commission (FTC) recently released new data revealing a troubling reality: social media has become one of the most effective tools for modern fraudsters. According to the FTC, consumers reported losing approximately $2.1 billion to scams that originated on social media platforms in 2025 alone. Even more striking, reported losses associated with social media scams have increased more than eightfold since 2020.

For businesses, those numbers raise more than consumer protection concerns. Those scams are a threat to legitimate businesses. They siphon off potential customers and make consumers more skeptical. Social media scams can involve fake ads, misleading endorsements, and fraudulent shopping schemes that erode trust in the online marketplace. They also signal an area of increasing regulatory scrutiny, particularly for companies that rely on social media advertising, influencer partnerships, e-commerce, or direct customer engagement.

The FTC’s findings show why online deception remains a major enforcement priority and why businesses should be paying close attention to how they market, monitor, and protect their presence online.

The FTC’s Ongoing Focus on Online Deception

As the agency principally responsible for protecting consumers from unfair or deceptive acts and practices, the FTC is taking a close look at what’s happening on the social channels. Under Section 5 of the Federal Trade Commission Act, the agency possesses broad authority to investigate and pursue individuals and companies that engage in deceptive conduct affecting consumers.

Historically, fraud schemes typically relied on telemarketing calls, mail solicitations, or email campaigns. Today’s scammers, however, increasingly leverage social media platforms because they provide access to billions of users worldwide while offering sophisticated targeting tools that can be misused to identify potential victims.

The FTC’s latest report demonstrates how scammers are capitalizing on these capabilities. Fraudsters may compromise legitimate user accounts, analyze publicly available profile information to tailor their schemes, or purchase advertisements designed to mimic legitimate investment opportunities, online retailers, or personal relationships.

Why Social Media Creates Unique Legal Challenges

Unlike traditional fraud schemes, social media scams often blur the lines between advertising, personal communications, and user-generated content. A fraudulent investment solicitation may appear as a sponsored advertisement, a recommendation from a seemingly trustworthy acquaintance, or a testimonial from an alleged successful investor.

This creates significant challenges for regulators. Many scams originate from individuals located outside the United States, utilize rapidly changing accounts and websites, and can reach thousands of consumers before detection. As a result, enforcement efforts frequently occur after substantial consumer harm has already occurred.

The FTC’s findings also raise ongoing questions regarding platform responsibility, content moderation practices, advertising review procedures, and the adequacy of consumer protection measures implemented by major technology companies. While federal regulators continue to evaluate these issues, businesses operating online should expect increased scrutiny regarding advertising practices, endorsements, influencer marketing, and representations made through social media channels.

The Most Costly Social Media Scams

The schemes tend to fall into categories that are aligned with social media users’ interests.

Investment Fraud

Investment scams generated the largest reported losses, accounting for approximately $1.1 billion of the $2.1 billion reported lost through social media scams in 2025.

Many of these schemes begin with advertisements or posts promising financial education, passive income opportunities, cryptocurrency investments, or access to exclusive investment strategies. Fraudsters often create online communities populated with fabricated success stories and testimonials intended to create legitimacy and urgency.

From a legal perspective, these scams frequently implicate federal and state securities laws in addition to consumer protection statutes. Regulators such as the FTC and the SEC have increasingly focused on fraudulent investment promotions disseminated through social media platforms.

Online Shopping Scams

Shopping scams represented the most frequently reported type of social media fraud. Consumers reported purchasing products advertised through social media only to discover that the goods never arrived, were materially different from what was advertised, or were sold through websites impersonating established brands.

These schemes often involve violations of consumer protection laws prohibiting deceptive advertising and false representations regarding products or services. Businesses engaged in legitimate e-commerce should view these developments as a reminder of the importance of maintaining transparent advertising practices and protecting brand identities from impersonation.

Romance Scams

Romance scams continue to generate significant losses and often involve a sophisticated blend of emotional manipulation and financial deception. According to FTC data, a substantial percentage of reported romance scams began on social media platforms.

In many cases, scammers cultivate relationships over extended periods before requesting financial assistance or steering victims toward fraudulent investment opportunities. These scams demonstrate how publicly available personal information can be weaponized to create highly personalized and persuasive schemes.

A Reminder for Businesses

Companies increasingly rely on social media advertising, influencer partnerships, targeted marketing campaigns, and direct customer engagement through social platforms. As regulators continue to focus on online deception, businesses should regularly review their advertising disclosures, endorsement practices, privacy policies, and cybersecurity measures to reduce legal and compliance risks.

Organizations should also remain vigilant against brand impersonation and account compromise, both of which can damage customer trust and potentially expose businesses to reputational harm.

Practical Takeaways

The FTC’s report serves as another reminder that technology often creates both opportunity and risk. Social media platforms provide businesses with unprecedented access to consumers, but they also offer scammers an efficient and inexpensive means of reaching potential victims.

Consumers should exercise caution before making purchases, sharing sensitive information, or acting on investment recommendations encountered through social media. Businesses, meanwhile, should ensure that their online marketing practices comply with applicable consumer protection laws and that appropriate safeguards are in place to protect both customers and brand reputation.

As online commerce and social media continue to converge, regulatory scrutiny in this area is unlikely to diminish. The FTC’s latest findings suggest that social media fraud will remain a significant enforcement priority, and businesses should take this as a reminder to review how they advertise, communicate, and protect their brands online.  

Nicholas Lipresti is a transactional attorney based near Boston, concentrating his practice in corporate, business, commercial lending, and finance law. His practice focuses on structuring, negotiating, and closing joint ventures, as well as mergers and acquisitions (both buyers and sellers).