The latest scam hitting Instagram users

The Financial Conduct Authority has revealed that Instagram users are being ‘scammed’ by ‘get rich quick’ schemes, costing people up to £87,400 a day.

By George Letheren Smith

Many are being dragged into fraudulent direct selling schemes, where prices are changed and the participant can find it difficult to escape.

These are modelled of pyramid schemes, which are where someone promotes a scheme to two or more people which the user would then pay a subscription to join. This is illegal in the UK.

New research has also revealed that young people, 25 and under, are six times more likely to participate in a scam on social media than over-55’s.

Forex trading is one example of how Instagram Influencers can make even more money on the platform (Pxhere.com)

Julia Ruane, Head of PR at Crisp Thinking, a social media safety organisation, said that young people should be wary as technology makes approaches easier. She said: “The internet and social web have made it easier for people to get approaches out there and do it on mass." Turnover magazine previously revealed the issues for young people who get involved in Instagram trading schemes, that are promoted by influencers through sponsored posts. This is further backed up by the new evidence discovered by the Financial Conduct Authority, who have said many participants in these schemes are students. However, Nicki Hesford, who runs her own business training company, believes a lot of people are also being sold products by plenty of people who don’t use sponsored content. Ms Hesford said: “Facebook try to stamp that stuff out and they do a good job of it, but sometimes they will slip through the net. They’ll slip through the net when they’re organic.” The attraction is caused by binary options, where a user gives money to a company who then places a bet for them.

Companies such as Avon and Herbalife follow Direct Selling models, using social media to help grow the business (Wix)

If you encounter a scheme which you are concerned may be a scam, check it out on the FCA Warning List first

For more tips on how to avoid getting stung by a scammer, watch this handy video from A Closer Look

Read our full investigation into the dark side of Instagram in Turnover issue 1, out March 28th