Fraud concerns pose a problem for social shopping

New research from UK-based Lloyds Banking Group suggests that Meta-owned properties of Facebook and Instagram are fuelling the rise of purchase scams on the platforms.

Why it matters

Trust in brands matters, and for brands a critical route to building trust runs through media. Lloyds doesn’t break down how many scams per channel but many come through Facebook Marketplace, the peer-to-peer listings platform.

While the research doesn’t say that social media sites are culpable, it suggests that 80% of payment scams start with the tech sector. It argues that “relying on the banking sector alone to detect scams and provide refunds means those platforms where the vast majority of the fraud starts have no incentive to stop it”.

Although there’s no indication that this perception could spread to the vast majority of legitimate brands that advertise on the platform, it could dampen some of the willingness for consumers to convert there. This remains to be seen. It is also worth noting that given the financial burden falling on banks for reimbursement, the sector would stand to gain from a reapportioning of the responsibility for making good on scam victims.

Key message

“Lloyds Banking Group is calling for technology and telecommunication companies to do more to stop scams at source and play their part in refunding victims of fraud which originates on their platforms.”

The data

Based on an analysis of reported cases among the bank’s 25m retail banking customers, the study finds that:

• 68% of all purchase scams start on Meta-owned social media platforms (though this includes Facebook Marketplace).
• While this channel appears to account for a majority of the volume of cases, it accounts for “around 40%” of the total money lost to shopping scams.
• Across the industry the average amount lost by the victims of purchase scams is around £570.

Bottom line

Given that brands don’t ask for bank transfer payments or sell on Facebook Marketplace, there’s no suggestion of any brand safety issues. However, as there is a rising interest in resale in certain sectors, this news carves out an opportunity to provide a verified brand platform. The likes of retailer John Lewis to high-fashion brand Balenciaga are already exploring their own programs.

Sourced from Lloyds Banking Group, WARC