The Australian Competition and Consumer Commission (ACCC) has called on Facebook and Google to do more to address the growing number of fake celebrity endorsement scams across its platforms.
Most of the reports, made to the ACCC's Scamwatch website, involve fake advertisements running on Google ad banners or as ads in Facebooks news feeds.
According to the consumer watchdog, people are increasingly being caught out by celebrity endorsement scams, with reports to Scamwatch increasing 400% and losses increasing a staggering 3,800% so far in 2018.
Scams frequently appear across social media as online ads that include fictitious quotes or edited images of celebrities, such as presenters like Lisa Wilkinson and Jessica Rowe, promoting various products from skin care creams to weight loss pills.
Scamwatch has received almost 200 reports in 2018 and losses totalling more than $142,000.
People aged 45 and older accounted for 63% of losses to these scams, with women more likely to fall victim to the scams than men.
“The growth in these scams is very concerning, particularly as over half the reports we received included a financial loss,” ACCC deputy chair Delia Rickard says.
“The groups behind these celebrity endorsement scams are organised and sophisticated fraudsters who are often involved in other scams. It’s easy for them to create fake ads and websites to give credibility to their con, so people need to be very careful and sceptical about ads they read on social media and websites."
Most people lost between $100 and $500 and in one case, a victim lost more than $50,000 through a fake celebrity endorsement of an investment scheme.
The scam works by consumers signing up for a ‘free trial’ for a product. As part of this process, they have to provide their credit card details.
The ‘free trial’ however, has strict terms and conditions such as being required to return the product within a near impossible timeframe, and an automatically renewing subscription that is difficult to cancel.
In most cases, these terms are only visible on the document that arrives with the product.
The celebrity scam ads were the focus of last week's Media Watch in which Paul Barry called for Facebook and Google to do more to protect consumers.
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