Social Commerce ScamsWhy Social Media Works so Well for Scammers

Social Commerce Scams Are Elevating Fraud to the Next Level

When social networks like Facebook and Myspace first hit the scene in the 2000s, most people didn’t think that much about the potential for commerce being conducted on the platforms. Times have changed, though; by the end of next year, social commerce is expected to hit $2.9 trillion globally.

There’s a huge potential shopper base here. In the US alone, 50% of shoppers use at least one of the top three social networks (Facebook, Instagram, and TikTok) on a regular basis. And, when consumers are scrolling, they’re shopping.

That has created fantastic revenue opportunities for merchants… but also a very tempting target for scammers. 

In this post, we’re gonna look at a variety of social commerce scams, but with a specific focus on Instagram fraud. We’ll see how these platforms are vulnerable, and what you should do to protect your revenue while doing business via any social platform.

The Value of Social Commerce

Before we go any further, I want to clarify that social commerce is still a very worthwhile venture. In fact, it’s perhaps the best new opportunity for reaching your customers since the introduction of the internet itself.

By combining eCommerce technologies and capabilities with the broad audience offered by social media platforms, social commerce is fundamentally changing how merchants interact with and sell to consumers.

Seamlessly transacting from within a social network means users can discover and purchase products but still remain engaged with the platform. It’s an ideal marketing plan, and it’s working: as of 2025, an estimated 2.77 billion people shop online through eCommerce platforms or social media stores. That’s roughly one-third of the global population.

Instagram is at the forefront of this trend, so let’s dial in that platform, for a moment. The service boasts 1.74 billion users, over 90% of which are located outside the US. Those numbers make it an outstanding channel for reaching a global audience. Based on data from parent company Meta, 70% of users count on Instagram for product discovery, while 44% specifically shop through the platform weekly. 

Instagram is a powerful sales channel (particularly for categories like fashion, beauty, and  lifestyle). But, it’s also become a magnet for fraudsters.

According to an internal analysis, some 70% of newly active advertisers on Instagram and Facebook in 2022 were scams or ads for illicit or poor quality goods. And, the situation has probably gone even further downhill from there.

Is it as dire as it sounds? And if so, how did this all happen?

Social Commerce Scams: The Perfect Storm

While no social media platform is immune to scammers, Instagram’s fraud issues were in many ways exacerbated by a “perfect storm” of fraud-friendly events.

For starters, there was the need for a fast expansion of the shopping feature. This was of course driven by pandemic sheltering in place. The rapid scaling may have resulted in overly simplified checkout processes, making things easier for fraudsters. The timing also coincided with other factors, like a surge in cryptocurrency acquisition, and the rise of vast crime rings working largely out of Southeast Asia.

If that wasn’t enough, fraud prevention became even more challenging when new, sophisticated AI-driven image generators came on the scene. Fraudsters are now capable of crafting complete social media profiles — including histories, pictures, videos, and activity — for people and organizations that don’t even exist.

All this set the stage for social commerce fraud schemes.

How Do Social Commerce Scams Work?

I’m talking about a wide variety of practices here. It could be scammers leveraging the credibility of known influencers to trick followers. Or, creating fake stores designed to resemble popular luxury brands where counterfeit goods get sold based on pictures of the genuine item.

Then there are the imposter scams, where fraudsters advertise a legitimate business but insert links to their scam sites. Take the recent example of Edgar Guzman, as reported in the Wall Street Journal, for instance. 

Guzman is the proprietor of an Atlanta-based home-improvement supply store. As reported in the piece, he “has been getting irate customer calls for over two years.”

These consumers are upset because they responded to his Instagram ads and sent payment for products that never arrived. The problem? They weren’t his ads. His company doesn’t even do online sales. Scammers created realistic looking ads featuring his logo and offering fantastic bargains. They reaped the benefits, leaving Ed with a bad online reputation and a list of potential customers who will never buy from him now.

Scammers are wreaking havoc on Instagram, but as some have pointed out, Meta seems reluctant to tackle the problem head-on. While the tech giant points to their efforts to work on the issue, they’ve also argued in US Federal court that the company “does not owe a duty to users” to address fraud on its platforms.

Meta doesn’t approve of scammers abusing Instagram; we know that. Then again, revenue is revenue, regardless of the source, so it’s also conceivable they’re in no hurry to tighten the net, either. The Wall Street Journal article I cited above notes that Instagram advertisers can have as many as 32 strikes (reported complaints) against them before the company takes action.

That leniency can be helpful for legitimate stores who fall victim to the occasional baseless complaint. At the same time, Instagram is giving scammers a lot of wiggle room to keep practicing their craft, with little fear of repercussions.

Vulnerability Factors

Instagram originally worked with its own checkout system. As of 2025, though, the company is transitioning to a new setup where buyers will have to checkout from the seller's website, rather than from within the app. This gives merchants more control over the process. Not coincidentally, it also shifts more of the potential fraud liability away from Meta.

Unfortunately, this move could also make it easier for scammers to operate. Traffic from a faux IG store can now be shuttled directly to the fraudster’s site, without having to deal with Instagram’s built-in checkout and security.

True, this will still require scammers to have a dedicated site for checkout. But, one site can work for multiple online stores. That site doesn’t need the capability of actually processing card payments, either; it could just be there to steal cardholder information. That’s fairly easy, as long as the user isn’t paying attention.

And, they likely won’t be.

Remember: Instagram was designed for scrolling. The whole idea is to give users lots of new material they can experience, then move on. To leverage that, Instagram shops must make impulse purchasing as simple as possible.

One downside to that, from a marketing standpoint, is that there isn’t time to develop any kind of customer relationship. Does that matter, if you already have the sale? Well, yes: one report shows that more than half of customers experience buyer’s remorse after an impulse purchase.

And, since they don’t have any type of relationship with you, those buyers are much more likely to skip the return process and simply file a chargeback. Fraud carried out by crooks impersonating you can be a pain, as it negatively impacts your reputation. But, claims actually filed against you will cost you time and money in the immediate sense.

Protecting Your Social Commerce Business

All things considered, social commerce is a net benefit for merchants. For most, it’s too lucrative of an opportunity to pass up. This is particularly true for certain markets and demographics that can’t be effectively reached by more traditional methods.

With that in mind, there are some best practices you should consider to protect your reputation and revenue. Most of these would hold true for any eCommerce ventures, but social commerce especially:

In the end, avoiding social commerce scams isn’t significantly different from other facets of fraud management. Only you can decide if the potential payoff of social commerce is worth the effort it takes to thwart spammers.