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Monday, 24 September 2018 10:54

Call for social media giants to crack down on 'celebrity endorsement' scams Featured

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Celebrity endorsement scams are rife in Australia with people increasingly being caught out by fake advertising scams, prompting the competition watchdog, the ACCC, to call on Google, Facebook and Instagram to do more to crackdown on the “fake ads” to prevent scammers reaching potential victims.

The call for action by the social media sites comes from Australian Competition  and Consumer Commission Deputy Chair Delia Rickard who says “most of the reports to Scamwatch involve these scam advertisements running on Google ad banners or as ads in Facebooks news feeds”.

“These tech giants must do more to quickly suspend ads, as every time consumers click on a scam ad, they are at risk of losing money.

“If you are caught up in one of these scams, call your bank immediately to try and arrange a chargeback and to stop any further debits to your credit card.”

Rickard issued her call on the social media giants as the latest report by the ACCC’s Scamwatch revealed that celebrity endorsement scams have jumped by 400% in 2018 – and with losses increasing a staggering 3,800 percent so far this year.

The ACCC reveals in its Scamwatch report published on Monday that the scams often appear as online advertisements or promotional stories on social media or a seemingly legitimate, trustworthy website.

The ACCC notes that the scams include fictitious quotes and “doctored or out-of-context images of the celebrity”, such as presenters from the TV show Shark Tank, promoting a product such as skin care creams, weight loss pills, or investment schemes.

And the Commission says the Scamwatch website has received almost 200 reports in 2018 and recorded losses totalling more than $142 000 – with people aged 45 and older accounting for 63% of losses to the scams -  and women more likely than men to be a victim.

“The growth in these scams is very concerning, particularly as over half the reports we received included a financial loss. Most people lost between $100 and $500 and in one case, a victim lost more than $50 000 through fake celebrity endorsement of an investment scheme,” Rickard said.

Rickard says the scam works by consumers signing up for a ‘free trial’ for a product, and as part of this process, they have to provide their credit card details.

The ACCC statement observes that the ‘free trial’, however, has strict terms and conditions such as having to return the product within a near impossible timeframe, and an automatically renewing subscription that is difficult to cancel. These terms are often only visible on the document that arrives with the product.

“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,” Rickard said.

“It is vital to research and read independent reviews of the company. Consumers should verify celebrity endorsement of products from the celebrity’s official website or social media account.”

And here’s a list of celebrities - provided by the ACCC - who have been used in celebrity endorsement scams based on reports to Scamwatch from members of the public:

  • Cate Blanchett
  • Deborah Knight (Nine News Sydney presenter)
  • Delta Goodrem
  • Dr David Sinclair (Head of Ageing Lab UNSW)
  • Dr Oz
  • Emma Thompson
  • Georgie Gardner (Today Show)
  • Jessica Rowe (Studio 10)
  • Kyle Sandilands
  • Lisa Wilkinson (Today Show)
  • Mark Shuttleworth (BBC/CNN)
  • Meghan Markle
  • Mikhail Varshavski (Dr Mike – US Celebrity)
  • Nicole Kidman
  • Oprah
  • Sally Field (American actress)
  • Sonia Kruger (The Voice, Today Extra)
  • Steve Baxter (Shark Tank)

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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