Fakers. Charlatans. Scammers. These are just some of the words you could use to describe the owners of the social media profiles tricking young people into trading scams they believe will make them rich. Such profiles flaunt fake lavish lifestyles that are allegedly funded through hugely successful trading activities, but in reality are elaborate lies used to convince impressionable followers to follow suit and part with their cash.
The results have been catastrophic and young people have been scammed out of thousands by schemes like this. But why are so many Instagrammers falling victim to this and how can they avoid the fraudsters and prevent their activities from spreading further?
How are the scammers reeling people in?
According to Trade Nation, “Instagram has become a hotbed for scammers looking to entice beginner traders looking to make a quick buck. While these people don’t have any trading success themselves, they trick their followers by posting photos of the lavish lifestyles they claim to lead. In reality, their income is the commission they earn by getting unsuspecting traders to sign up for dodgy platforms and products.”
Ultimately, such scams are successful because they appeal to what the Instagram generation finds appealing: appearing cool and successful. The truth is, dangling a carrot promising quick, easy money in abundance is sure to grab people’s attention, regardless of rationale.
The scammers begin by creating Instagram accounts. To an expert, these accounts are easy to decipher and tend to be alike. They will typically feature photos of attractive young people wearing designer clothing, posing in front of mansions and expensive cars, all while holding up big wads of cash. It’s shocking for a reason: it aims to entice the people who desire that lifestyle the most. It can’t be half-cut and it can’t be tame. The more ridiculous, the more it draws its target audience in. That said, they also want to be relatable. These are characters that ordinary people can identify with and believe they can become.
How have people been affected?
Since the coronavirus outbreak began in 2020, there have been 63 million investment fraud schemes on social media. This is according to new figures by Action Fraud, the UK police national reporting centre for fraud and cybercrime. Before the pandemic, it averaged £60,000 a month, but it has now risen to a huge £200,000 a month.
People under 25 are falling for the big payouts promised by rudimentary Instagram scams. A recent case that made the news told the story of accountant Jonathan Reuben, who was scammed out of £17,000. The BBC reported that “the alleged fraudster, Gurvin Singh, a man from Plymouth, claimed he got rich quickly through foreign exchange trading.” Mr. Singh then offered users who follow him on Instagram the chance to follow his get-rich-quick trades.
Reuben, 24, said he was promised immediate profits and given access to a trading platform where he could analyse his investment’s performance. At first, his profits rose and he invested more money. But after a few months, his funds crashed to zero over two days. The scammer had taken the money and ran.
With coronavirus and rising levels of youth unemployment, some have used the extra time they’ve gained during the pandemic to explore alternative sources of income. Trading seems like an ideal option: it can be done remotely and there are unlimited resources and information explaining how to do it. What’s more, it’s perceived to be cool — an aspect exaggerated by scammers. There is even an element of FOMO attached to it, with the latest hyped up financial instruments (Dogecoin anyone?) being plastered all over social media. It’s often made to seem like an easy way for smart, resourceful people to make some fast cash.
In reality, it’s far from that. Trading is complex and can take years to learn how to do so successfully. Still, young people look for shortcuts. This is why the scammers thrive. Victims are keen to make money but have little knowledge about how trading works, making them easy targets.
How to avoid Instagram trading scams
1. Always be cynical
It’s important that newbie traders adopt a degree of scepticism. If something sounds way too good to be true, it probably is. As aforementioned, trading is difficult and complex, so anything that claims otherwise is bending the truth.
2. Look for the red flags
If the profile features an ostentatious, flamboyant character flashing money and cars, never interpret these as features of their credibility. Anyone can hire a sports car and pose in front of one. More importantly, if they are guaranteeing instant money and immediate success, this is a surefire sign that they aren’t legitimate and are preying on baser urges.
3. Learn trading basics
There are plenty of resources out there that will outline the fundamentals of trading. Not only will these resources provide the basic level of education required to make informed trading decisions, but they will also help you to identify a legit expert from a fake one. Before parting with any money, education is key.