Social media has completely changed how we communicate. Now, you’re just one click away from sending and receiving messages from almost anyone worldwide.
Influencers are at the heart of these social media platforms. They’re savvy people who’ve built a strong online community. This community listens to and takes great interest in their every move.
While this may seem harmless at first, a growing number of influencers, nicknamed ‘finfluencers,’ are turning to give their communities financial advice. The danger is that their advice could be a scam aimed at stealing money and defrauding their fanbase.
In 2022, for example, the Justice Department in America charged eight influencers with a combined following of 1.5 million people for financial fraud. They scammed followers by suggesting risky investments in ‘pump-and-dump’ schemes.
This article will explore how and why young people turn to finfluencers for money advice. It will discuss common features of financial and crypto scams and highlight the best ways people can protect themselves from falling victim to these elaborate threats.
Just how many young people listen to finflunecers?
New research paints a new light on how many young people take financial advice from fininfluencers. A survey from Deloitte found that 25% of 18–24-year-olds will go to social media for financial guidance, with 20% investing money based on advice they received.
This becomes all the more worrying when the research found that just 16% of young people said they would go to their bank for advice. There’s no way to determine whether the advice these young people are receiving online is, in fact, legitimate or not.
Especially in this era of artificial intelligence, scammers can now create elaborate and genuine-looking investment scams that can impersonate influencers and deceive their fanbase before the truth emerges.
And because they don’t engage with formal institutions, there’s no way to guide them on important financial decisions.
How to identify financial scams from influencers
Recognizing the traits of online scams can be vital in identifying and avoiding potential scams. The most common ones include:
- Sense of urgency: Scammers use time to motivate people into making rash decisions. Always take your time when spending your hard-earned money.
- Suspicious links: Scams often use shortened URLs that, once clicked, will bring you to a fraudulent website.
- Too good to be true: Social media scams often are sensationalist, promising you a quick return on your investment with little to no effort.
- Strange payments: Be wary of posts that ask you to send money in specific ways, e.g., via wire transfers, as these are incredibly hard to reclaim.
- Poor spelling or grammar: If a post online contains strange spelling or odd phrases, this is a tell-tale sign that it is a fake profile set up to deceive.
- Malicious downloads: Avoid downloading attachments from messages or shared websites. These may contain malware designed to corrupt your device.
Five ways to protect yourself from financial scams
Below are practical ways of protecting yourself from financial scams, especially those that are spread across social media:
1.Check and verify the social media accounts you follow
Finfluencers may have garnered a large following through bots. New followers may assume they have a good reputation in finance simply because they appear popular.
Before taking advice on social media, check for the following:
- Engagement: Low engagement or ‘copy and paste’ replies on posts suggest that most of their huge following could be bot accounts.
- Content quality: Check through previous posts on accounts to gauge how informed, consistent, and professional an influencer truly is.
- History: Influencers rarely appear overnight. Instead, they spend considerable time building up their audience. Be wary of recently created accounts that achieve overnight success.
- Verify: Some scammers might create fake replica accounts, impersonating genuine influencers. Be sure to verify the authenticity of well-known accounts before taking their advice.
- Don’t trust the ticks: A blue tick or a verification check isn’t necessarily proof that the account is legitimate. These can be bought in many instances.
2.Look for online disclosures
Finfluencers may have garnered a large following in a completely different niche online. Once they pivot to financial content, new followers may assume they have a good reputation in finance all along.
Whenever reading financial advice on social media, examine the post thoroughly to see if the influencer is an expert. If not, chances are they are being paid to direct their audiences to a new financial trend.
Look for any declarations that may be included in posts. In many jurisdictions, it has become compulsory for influencers to disclose whether they’ve been paid or sponsored to promote a service, product, or investment, usually with the hashtag #sponsored or #ad.
3.Improve your online privacy
Hackers often use the information they collect about you to create conceiving scams. As such, part of protecting yourself from financial scams is bolstering your privacy online.
One of the best ways of protecting yourself against this is by using a virtual private network (VPN). This cybersecurity tool encrypts your internet connection, thus keeping your data safe and secure. It can also block intrusive ads and flag fraudulent links before you click on them.
Because we use our smartphones to surf social media, you must get a mobile VPN to enjoy maximum protection. Because of their ad-blocking features, many official marketplaces like the Google Store won’t offer VPNs. Instead, you should visit a service provider and download the app directly.
4. Use social media to educate yourself on topics before acting
Social media posts have become popular among younger people because they are short, engaging, and informal. They can break down complex issues into understandable topics. And while they can be abused to scam people out of money, they can also be a source of good.
Research has shown that up to 44% of Gen-Zs find social media offers ‘worthy financial advice.’ Experts have said that social media can be used to educate more young people on the values of sound finances.
By learning the basics of investment and following genuine accounts well-respected in the industry, young people can become empowered by influencers’ advice rather than be victims.
5. Activate multi-factor authentication (MFA)
A quick and easy way to protect your accounts from scams is by activating multi-factor authentication. This will add a requirement that upon login, a person must verify their identity by another means, often through single-use codes or an authenticator app.
Even if a scammer finds out your personal login information, MFA will freeze them out of your accounts because they cannot bypass the additional security clearance.
You’ll be notified of unauthorized login attempts, giving you precious time to change your passwords, review and report suspicious financial security, and be more vigilant going forward.