In today’s digital age, social media influencers have become key players in shaping public opinion, consumer behavior, and even investment decisions. These individuals amass large followings on platforms like Instagram, YouTube, Twitter, and TikTok, leveraging their popularity to promote products, services, or lifestyle choices. While many influencers act ethically and transparently, some use their platforms to grift or scam their followers, making it increasingly important to understand the risks and take precautions when engaging with their content.
What is a Social Media Influencer, and Why is it Dangerous?
A social media influencer is someone who has gained credibility and influence within a particular niche or industry, using social media platforms to connect with and engage their audience. Influencers often collaborate with brands or companies to endorse products, services, or ideas to their followers.
The danger arises when unscrupulous influencers take advantage of their followers’ trust, promoting scams, fraudulent investment opportunities, or overhyped products to make a quick buck. Followers may be misled into making poor financial decisions or losing money, often without realizing they’ve been scammed until it’s too late.
Real-life Cases of Influencer Grifting
John McAfee’s cryptocurrency schemes: The founder of the McAfee antivirus software company, John McAfee, used his significant influence on Twitter to promote various cryptocurrencies and initial coin offerings (ICOs) without disclosing that he was receiving substantial payments for these promotions. His followers often experienced significant financial losses when the prices of these cryptocurrencies plummeted after he sold his holdings.
The “Big Pump Signal” Telegram group: In January 2018, a popular YouTuber with over 200,000 subscribers named Marquis Trill began promoting a Telegram group called “Big Pump Signal.” The group claimed to organize coordinated “pump and dump” schemes involving lesser-known cryptocurrencies. Marquis Trill encouraged his followers to join the group, where they would receive instructions on which cryptocurrencies to buy at specific times. As group members bought these cryptocurrencies, their prices would surge, and the group’s organizers would then sell their holdings for a profit, causing the price to crash and leaving unsuspecting followers with significant losses.
Recommendations: How to Avoid Influencer Scams and Verify Legitimacy
Research before investing: Always conduct thorough research on any product, service, or investment opportunity promoted by an influencer. Look for independent reviews, news articles, or expert opinions before making a decision.
Check for disclosure: Legitimate influencers should disclose if they have received compensation, free products, or any other benefits from the companies they are promoting. Look for disclosure statements in their content or descriptions.
Be skeptical of too-good-to-be-true claims: If an influencer is promising extraordinary returns or claiming a product will change your life, be cautious. Remember that if something sounds too good to be true, it probably is.
Diversify your sources of information: Don’t rely solely on the advice of a single influencer. Seek out multiple perspectives, consult with financial advisors, or use reputable investment research platforms to make well-informed decisions.
Trust your instincts: If something feels off or an influencer’s promotion seems overly aggressive, trust your gut and take a step back to reevaluate the situation.
While many social media influencers provide valuable insights and recommendations, it’s essential to be aware of the risks associated with grifting and scams. By staying vigilant, conducting thorough research, and seeking out independent sources of information, you can protect yourself from falling victim to influencer scams and make informed decisions about your financial future.
Written by Mohamad EL Chawli, CEO of DapraLab
March 16, 2023