Fraud

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As a follow up to our previous posts on digital assets and social media, the Federal Trade Commission recently published a Consumer Protection Data Spotlight on June 3, 2022.  In the post, the FTC provides insights on the fraud reports submitted to the FTC from January 1, 2021 to March 31, 2022.  According to the FTC, the fraud reports show that social media and digital assets are a “combustible combination for fraud” with nearly half of those who reported losing cryptocurrency to a scam saying that it “started with an ad, post, or message on a social media platform.”  Since the start of 2021, more than 46,000 people reported losing over $1 Billion of cryptocurrency to scams, and during the reporting period, nearly four out of every ten dollars that was lost to a fraud that originated on social media was lost in crypto.  This report is another example of agencies and courts taking note, and informing the public that the connection between social media and digital asset fraud is direct, and significant.

In December 2021, our post Federal Reserve and social media, highlighted sections of the Federal Reserve Financial Stability Report which demonstrated the Fed’s focus on the role of social media and retail investors in equity market volatility.  In March 2022, the Board of the International Organization of Securities Commissions (IOSCO) followed suit, and also turned their attention to the role of social media and retail investors.  The IOSCO Retail Market Conduct Task Force Consultation Report aimed to set out a toolkit of proposed policy and enforcement measures with guidance to help mitigate the potential risks of retail investor harm posed by online and cross-border marketing and distribution, and digital offerings.  The findings of the report demonstrate both the global nature and the importance of these issues.

Creators of fraudulent crypto assets beware.  A recent court decision supported investors, creators and marketers of legitimate crypto assets, and the integrity of the crypto asset market as a whole.

While the creator of BitConnect remains at large and is facing his own indictment for his role in the scheme that allegedly defrauded investors of $2.4 Billion, this case focuses on the promoters and marketers of a commodity known as BitConnect Coin.

In this age of social media, companies and brands have faced countless criticisms for their lack of transparency, copyright infringements disguised in the form of “flattery or inspiration” and we can’t forget the many inclusivity flops.

Brands, including beauty brands, are now dedicating more of their marketing budgets to paying influencers for their “honest” reviews in hopes that they can convince the public to purchase their products. What’s more striking is that consumers are heavily relying on social media for help in determining where to place their value and money. With these stakes, some companies have turned to deceptive practices in a search for social media popularity.

We have previously written on social media account verification for businesses, in order to help customers deal only with the authentic brand.  But what about authenticating your social media followers/users/fans/members?

Unfortunately, there are currently “no methodologies available that would provide us with an exact number of non-actual member types of accounts,” according to LinkedIn’s 10-K filing for 2015.  (10-K at 18.)  LinkedIn goes on to state that some of its “non-actual member types of accounts” are: 

As we discussed in a recent post, “Social media overload”, social media has grown exponentially over the past decade and has caused businesses to change how they operate and how they make decisions. Social media has quickly become one of the most important marketing platforms, providing a convenient way for companies to reach broad audiences.

Engaging with customers online is quickly becoming the norm as consumers increasingly use social media to ask questions, seek customer service, and participate in dialogue with a business or their brand. The use of social media to deliver customer service…

Business owners using online consumer review platforms should be truthful and accurate, especially with respect to online reviews.

On August 20, 2013, social media search-and-review service Yelp! sued solo practitioner Julian McMillan for allegedly posting fake reviews about his own…