NET CLOS­ING ON WEB SCAMSTERS

As the au­thor­i­ties warn against Crowd1, the role of so­cial me­dia in pro­mot­ing pyra­mid schemes and shady scams is com­ing un­der in­creased scru­tiny

Financial Mail - - FEATURE - Bruce Whit­field

Dozens of global brands have sus­pended ad­ver­tis­ing on Face­book in an effort to pres­sure the so­cial me­dia plat­form to ad­dress hate speech (see page 15) — and the boy­cott is ex­pand­ing to other plat­forms, too.

Over the week­end Star­bucks an­nounced it has sus­pended ad­ver­tis­ing on some so­cial me­dia plat­forms amid such con­cerns, join­ing in­ter­na­tional brands such as Coca-cola, Di­a­geo and Unilever.

Face­book has long been crit­i­cised for its fail­ure to mod­er­ate con­tent, and has been ac­cused of be­ing in­stru­men­tal in se­cur­ing Don­ald Trump the White House four years ago.

Among so­cial me­dia plat­forms, Face­book es­pe­cially stands ac­cused of not do­ing enough to stop hate speech and the spread of dis­in­for­ma­tion. In ad­di­tion to its fail­ure to man­age po­lit­i­cal mis­in­for­ma­tion, the plat­form is also ac­cused of al­low­ing scamsters to ad­ver­tise their wares with­out com­punc­tion.

In the UK, Face­book has a fa­cil­ity that al­lows sus­pect ads to be re­ported to a cen­tral in­ves­ti­ga­tion of­fice at the com­pany for pos­si­ble re­moval — but it’s not avail­able any­where else in the world.

Crooks are al­ways keen to sep­a­rate you and your money. Now get-rich-quick scamsters are prey­ing on the des­per­ate and the greedy in the midst of the most se­ri­ous eco­nomic cri­sis in liv­ing mem­ory. To do so, they’re us­ing so­cial me­dia to pro­mote their offerings, and there’s lit­tle sign that the global plat­forms car­ry­ing their mes­sages have any in­ten­tion of shut­ting them down.

It used to be that you had to don a bala­clava and take a firearm into a bank branch to get a bag of cash. But as fi­nan­cial in­sti­tu­tions have tight­ened se­cu­rity, that’s be­come harder to do.

Of course, if you can’t be both­ered to rob a bank, you could just steal an en­tire bank — if the VBS Mu­tual Bank docket is to be be­lieved. It seems all you need is a broad con­spir­acy of in­di­vid­u­als with lots of author­ity and suf­fi­cient be­lief that they won’t be held to ac­count, and you can help your­self to the de­posits of a coun­try’s most needy.

Al­ter­na­tively, you could just get peo­ple to give you their money in the guise of “an in­vest­ment”. The odds of ever be­ing held to ac­count here are slim. Af­ter all, when the scheme fails, many of the peo­ple you caught out will be too em­bar­rassed to ad­mit they were swin­dled. Be­sides, build­ing a case against per­pe­tra­tors who hide their digital foot­prints is in­creas­ingly hard to do.

I can plot, al­most to the day — fol­low­ing an ad ap­pear­ing on Face­book — when the emails will ar­rive in my in­box ask­ing whether I have seen the lat­est “in­vest­ment opportunit­y”, and ask­ing if it’s a scam or not.

Is it a pyra­mid scheme, I’m asked.

The short an­swer: if it’s be­ing punted on so­cial me­dia and has no vis­i­ble means of in­come be­yond a re­quire­ment that you, too, sign up new mem­bers, then it prob­a­bly is.

Typ­i­cally, th­ese sorts of schemes re­quire each new mem­ber to sign up half a dozen more, un­til ev­ery­one who is go­ing to be taken in has been signed up and there is no fresh fod­der. Then the scheme pre­dictably col­lapses in on it­self — but not be­fore the per­son at the top has har­vested enor­mous re­turns for them­selves.

Last week, the Fi­nan­cial Sec­tor Con­duct Author­ity cau­tioned against in­vest­ing in Crowd1. I won’t waste time on the de­tails here other than to say: if it looks like a pyra­mid and is shaped like a pyra­mid, odds are it sphinx to high heaven

(yes, I know, I just did that).

Dodgy ads for un­savoury ser­vices used to ap­pear in news­pa­per clas­si­fieds. Today, for a frac­tion of the cost, they are found on so­cial me­dia sites. Clearly they must work, be­cause there are plenty of them, and they keep on com­ing. And plat­form own­ers are do­ing noth­ing to stop them.

The UK is the only coun­try that has forced Face­book to put a but­ton on its pages al­low­ing users to re­port ads they be­lieve to be scams. Face­book in­tro­duced the fea­ture, and promised to sup­port it with a spe­cially trained team that re­views and takes down dodgy posts. This was in re­sponse to a cam­paign by fi­nan­cial ed­u­ca­tor Martin Lewis, whose im­age had been used to pro­mote fraud­u­lent in­vest­ments on the plat­form.

Face­book in SA has de­clined to com­ment on why the fea­ture can­not be rolled out here — or, in­deed, any­where else in the world.

The idea that Face­book would de­lib­er­ately take down paid-for ad­ver­tis­ing may sound as log­i­cal as an an­nual turkey con­ven­tion to rat­ify Christ­mas each year, but the com­pany is un­der pres­sure over its con­tent poli­cies, and is fac­ing a grow­ing boy­cott from high­pro­file com­pa­nies.

Be­side the di­rect rep­u­ta­tional risk of still be­ing seen on Face­book, the fact that a grow­ing per­cent­age of the ads on the site are ques­tion­able means le­git­i­mate brands re­alise putting their cor­po­rate colours any­where near it makes them look bad too.

Face­book needs to act, if not to do the right thing, then to save it­self from long-term harm.

If it looks like a pyra­mid and is shaped like a pyra­mid, odds are it sphinx to high heaven

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