MoneyMagpie Editor and financial expert Vicky Parry warns readers not to get scammed by too-good-to-be-true social media finance scams
As the cost of living crisis continues, more people are unable to get loans through high street banks to ease the difficulty of rising debt caused by higher bills everywhere.
That’s why online scammers are getting savvy, targeting online users with ways to get quick money in ways that seem too good to be true.
Watch out for the social media finance scams to avoid becoming a victim of fraud or identity theft.
The TikTok loan
Finance companies are taking advantage of the younger demographic using TikTok, using adverts to promote instant payday loans. For the generation that doesn’t remember the downfall of companies like Wonga, which folded after a ruling about their unfair practices, adverts offering easy money can be very tempting.
Schools still don’t teach financial literacy, so many young people don’t really understand how loans work – or what massive interest rates mean.
They don’t read the fine print (like many of us), and these adverts make it easy to click through to get money almost instantly in a few easy steps. That means there’s no time to stop and consider whether the ‘too good to be true’ loan is genuine.
There are then two outcomes: either the scammers run off with the victim’s personal data to commit (expensive) fraud, or they charge interest rates that are almost impossible to pay off.
This is an aggressive practice and will leave the loan taker in debt for many years, unable to get out as huge repayments only pay off the month’s interest, which accrue again by the following month.
The compensation claim
“Did you get a car loan between 2002 – 2008”?
“Have you had your data leaked by XYZ company?”
“Were you a victim of PPI in 1999?”
Social media adverts that use people’s profile information, such as their age and location, to target them and promise big compensation payouts are on the rise.
They’re either a chance to take a cut of a legitimate claim that the person could put in for themselves anyway, or – worse – completely fake and a way for scammers to get your personal details.
If you see an advert for a compensation claim that you think could apply to you, don’t click on it. Instead, do your due diligence and research what the case is, any court rulings, and the process for appealing for compensation.
Things like PPI claims or mis-sold car finance can be claimed directly by the individual: any third party will take a predatory fee for doing it for you.
Similarly, around this time of year you might see Tax Rebate adverts promising you hundreds back from HMRC. You can check your own tax account online yourself through the HMRC website direct.
There is no need for someone else to do it for you. If you think you have overpaid tax, contact HMRC directly yourself. Don’t let a scammer take your details or help themselves to a huge percentage of any payment you are legitimately owed.
The romance scam
There are several types of romance scam online. But while many people are getting savvy to realising that, if their never-met online beau asks for money it is likely a scam, fewer are aware those promising riches could be the same, too.
These scams involve appearing to live lavish lifestyles, when in fact they use deepfakes with AI, or at best rent high-end cars and fake private jet photography sets by the hour for photoshoots they can use over and over to convince people of their lifestyle.
But then, oh no! They’ve got a sudden cashflow issue. You know they’re good for it, and they’re ‘only’ asking for a few thousand pounds. But the bank has frozen their account while they investigate someone trying to steal their money, or there’s been a delay in getting paid from their trust fund.
Don’t fall for it. Never lend money to someone you don’t know. Video calls online don’t count as ‘meeting’ anymore, either – deepfake AI make it easy to pretend to be someone else, even on a live video call.
The ‘make loads of cash’ job advert scam
You’ve probably seen job adverts on social media that promise you could make six figures in a year with this ‘part-time flexible job’. It’s a scam.
They want your financial details – which people expect to hand over to get paid from a job – and your passport or official ID, and more personal details like your National Insurance number. Then, it’s easy to replicate you and commit a lot of fraud in your name.
Never give out your bank details until you have started working at a new job. Never trust someone who gives you a job with promises of riches when you haven’t even met them for an interview.
And certainly, never, ever, apply for any kind of job without researching the company (with search terms like ‘scam’ and ‘scandal’ and checking sites like Glassdoor), first.
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