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TikTok: a cesspool of financial scams

Mar 14, 2024

TikTok: a cesspool of financial scamsWhile there is certainly good financial education content to be found on social media, there are also numerous scams and unethical practices, and TikTok is no exception.

In fact, the massive increase in TikTok’s popularity has seen a massive increase in financial scams being perpetrated via the platform.

The Financial Sector Conduct Authority (FSCA) recently warned the public to be cautious of a scam being run on TikTok and Facebook by individuals purporting to be from International Capital Markets (Pty) Ltd (IC Markets). While this is a legitimate company, these fraudsters were impersonating the company.

The FSCA received information from a member of the public who was defrauded by individuals on TikTok. They promised to invest her money in return for a greater payout, and subsequently requested her to deposit more money to release her investment return.

Another individual on Facebook offered to assist her with recovering her investment returns from the individuals who defrauded her, and this too turned out to be a scam as she was asked to deposit more funds.

These scams are not new, and we write about them all the time, but people still get caught out. We all need to be more vigilant.

A good rule of thumb is to never engage directly with the person or company on social media. If anyone tries to engage you on Whatsapp or Telegram, that is a further warning sign.

If you are interested in something being advertised, look for the company profile on other platforms. Do a Google search, find their website and contact them through that channel. Also search Google for the company name together with the word “scam” to see if anything comes up.

Beware those who appear to want to help you out

Apart from the investment scams, we have seen a proliferation of social media profiles where people offer to “help” consumers – for example, promising that they can reduce the interest on their loans, that they can get them out of debt review, or get money back if they have been overcharged.

Companies claiming they can lower your interest rates are just lead generators for debt counsellors. Never provide your details. If you are interested in debt review, contact a debt counsellor directly.

Understand what it involves and do not sign anything. Do not provide any personal information until you are comfortable you understand the process.

And no-one can get you out of debt review until your debts (apart from your home loan) are paid off. These operators just take your cash.

Influencers are paid for positive reviews

Be very careful of people on social media making claims about a positive experience when dealing with a company or boasting about how much money this company made them. This is especially rife in the crypto world, as well as forex trading.

In some cases, these profiles are fake, but often they are influencers and celebrities who have been paid to make those positive posts.

According to the Advertising Regulatory Board, influencers are supposed to declare when they have been paid. Some do, but many do not.

Before you follow the advice of an influencer, ask yourself these questions provided by the CFA Institute’s Research and Policy Centre:

  • Does the person/source who has created this content have any financial motivation to do so? Does the individual clearly disclose such motivations? If they are being paid, does that influence your perceptions of whether you can trust the information?
  • Does the person provide any information about what qualifies him or her to have expertise on this topic? Can this information be verified? Does this person have a presence outside of social media?
  • Is the information provided consistent with the most up-to-date information when cross-checked with other sources?

Don’t blindly believe what you see on social media. It is very easy to fake an identity and very hard to hold anyone accountable.

This article first appeared in City Press.

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Maya Fisher-French author of Money Questions Answered

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