Fraud and Disinformation on U.S. Social Media: A Growing Digital Threat

Fraud and Disinformation on U.S. Social Media: A Growing Digital Threat

In recent years, social media has increasingly become fertile ground for online deception and manipulation. Each month brings new scam tactics and waves of false information that take advantage of the openness, speed, and reach of digital communication.

According to The Paypers, global reports of online fraud grew by 10% in just one year, surpassing 293 million registered incidents in 2021. In the U.S., social media has become one of the primary gateways for fraudulent operations. According to the Federal Trade Commission (FTC), nearly one in four fraud victims report that the scam began on a social platform.

The financial toll is staggering. A report released in mid-2023 by the FTC revealed that social media-related fraud losses in the U.S. reached a record-breaking $2.7 billion. The actual figure is likely much higher, as most scams go unreported.

Social Media: The Perfect Storm for Modern Fraud

Data from the FTC consistently shows that social media is now the most profitable channel for scammers. During the first 18 months following the pandemic (January 2021 – June 2023), social platforms were the primary method of initial contact in fraud cases involving financial losses.

Young users appear especially vulnerable. Among people aged 20–29, nearly 38% of fraud victims said the scam originated on a social network. That figure rises to 47% for users aged 18–19.

Many of these schemes exploit economic instability. The most commonly reported scam involves online shopping: around 44% of social media fraud cases concern paid-for products (such as clothing or electronics) that were never delivered.

Even more damaging are fraudulent investment offers, often involving cryptocurrency. These account for over half of all reported losses related to social media fraud. Victims are lured into investing in supposedly “guaranteed” opportunities, only to have the scammers vanish.

Romance scams are also on the rise. According to the FTC, nearly half of those who lost money to online romance scams said the initial contact came through social media.

How Scammers Exploit Platform Features

What gives scammers an edge on social media? It’s a combination of low-cost targeting, easy anonymity, and emotional manipulation.

Fraudsters can easily create fake identities, hijack real profiles, and reach out to friends and contacts while posing as trusted individuals. Algorithms designed to serve personalized content also allow scammers to target users based on their interests, habits, and vulnerabilities — often for free.

According to The Paypers, over 25% of Americans who lost money to scams in 2021 said the fraud was linked to social networks.

This trend isn’t exclusive to the U.S. In Australia, 96% of users reported receiving suspicious contact attempts from scammers via social media over the past five years.

The Mental Cost of Disinformation

Beyond financial loss, disinformation on social media is silently undermining mental health. A notable study from the Massachusetts Institute of Technology (MIT) found that false stories on social networks “spread significantly farther and faster than truthful ones.”

Some viral disinformation posts received 100–1000 times more retweets than fact-based content. Sensationalism spreads not because it’s accurate, but because it taps into human emotion.

This stream of emotionally charged content can have measurable psychological effects. A 2022 study published in Scientific Reports found that individuals who shared misinformation about COVID-19 had nearly double the anxiety levels of those who didn’t. The researchers suggest that exposure to unverified claims increases uncertainty, stress, and fear.

Previous research had already linked global waves of fake news - especially during the pandemic — to spikes in panic, phobias, and in some extreme cases, hospitalization due to psychological distress.

Experts have coined this effect the “infodemic”: a flood of confusing or alarming content that overwhelms, misleads, and emotionally drains users. Studies show that disinformation amplifies feelings of loneliness, anxiety, and even depression - particularly among already vulnerable groups.

Disinformation also inflames social division. According to a 2020 survey by Pew Research Center, 64% of American adults believe that social media has a mostly negative impact on the country. Respondents cited the spread of false information, incitement of hatred, and cyberbullying as key concerns.

What’s Being Done to Protect Users

In response to these challenges, both governments and tech companies are rolling out new tools and initiatives.

However, technology alone isn’t enough. Experts stress the importance of digital literacy - the ability of users to critically evaluate what they see online. Here are key tips from security professionals and the FTC:

• Privacy Settings Matter – Limit who can view your posts and personal information. Avoid sharing details about your job, family, or health - this information can be used to tailor scam narratives.
• Think Before You Click – If something looks too good to be true or sparks strong emotions, take a moment. Verify the information through reliable sources. Even messages from friends may come from hacked accounts.
• Verify Identity – If someone you know asks for money or personal info via social media, verify the request via a phone call or face-to-face conversation. The FTC reports that many victims acted because they thought they were helping a friend. Or try this pro tip from YourSecret: during the conversation, ask scammers what your or your friend’s dog or cat is called - or when was the last time you had coffee together. Don’t feel awkward doing this - we live in an era where AI can mimic anyone’s voice. For example, Sam Altman has suggested having a digital password known only to close contacts. Consider setting one up.
• Use Two-Factor Authentication – Enable extra login protection using SMS codes or authenticator apps. Keep your apps and operating system updated. Modern antivirus tools can block phishing links and detect suspicious sites.

Social platforms are also expanding internal blacklists of known scam schemes and fake news sources. In parallel, U.S. agencies such as the FBI and FTC continue to issue scam alerts and digital safety guidelines.

A Shared Responsibility

While tech companies and regulators play a vital role, the responsibility for digital safety doesn’t stop with them. Users must remain alert, question what they see, and verify before sharing or reacting. The more informed and skeptical the audience, the harder it becomes for fraud and disinformation to take root.

In this ever-shifting information landscape, a combination of smart design, strong regulation, and media literacy is the key to long-term safety. Staying aware - even while casually scrolling - can make the difference between becoming a victim or staying protected.