The Social Networking Paradigm Shift and Internet Fraud

With the social networking frenzy reaching a fever pitch, companies and individuals are all trying to figure out exactly how to handle the rapid change in communication. The truth is that the rise of social networking marks a dynamic shift in the way that people connect, collaborate and communicate throughout the world. It has grown so quickly not because it is great new technology, but because it taps into a deep seated need for humans to interact in a human way. The advent of computers, the internet and web technologies meant that people were becoming more and more distant in their interactions. Employees worked remotely from their homes and experienced a dramatic reduction in the amount of true social interactions. Social networking has empowered people to connect with others in a way that satisfies the basic instinct to be social but on a scale that was previously unattainable.

With these new tools reaching mass adoption, companies are in a frenzy trying to prepare. They are writing social media policies and activating elegant new ways for their customers to interact. However, I believe that there is one factor that is silently becoming a serious threat…social networking fraud.

To really understand the problem, let’s take a quick look at a few important factors: Exponential Networks, Information is King, Facebook is no Fort Knox, and Stopping the Avalanche.

1. Exponential Networks – The nature of social networking empowers rapid growth of the number of connections that anyone has worldwide. It creates an exponential effect by allowing you to tap into other people’s networks and their friends’ networks. For example, I have 200 contacts on LinkedIn, but I am one degree of separation from 48,000 people and I am two degrees of separation from 3,780,000! This is extremely powerful. However, what is powerful for the user is also powerful for those that want to tap into your network with less than honorable intentions.

2. Information is King – In the old days of internet fraud, the main goal of hackers was to compromise your credit cards or bank accounts. Or they would employ ridiculous email scams where an ousted African prince wanted to give you his fortune if you would just send him five thousand dollars! Sure we all laugh at those, but enough people took the bait to make it worthwhile. However, the amount of value that was stolen was typically very small and very short lived. Today, one of the most valuable things that people can steal is your information. And guess what, your social networking profiles have an incredible amount of personal information. Everything from your dog’s name to your high school mascot is contained in your profile and shared with the world.

3. Facebook is no Fort Knox – When you financial accounts were the target, it was much more difficult. Not only were people inherently more cautious when it came to their online financial lives but financial institutions were exceedingly well prepared. Not only was it difficult to hack into these highly secure accounts, but because the financial institutions made significant profit from their banking customers, they went to great lengths to provide quick and effective recourse in the case of a fraudulent charge. One phone call and you got an agent right away and your account was locked down immediately…and you were usually not responsible for the fraudulent charge. Here is the problem…the social networking platform companies are not banks and they don’t care about your security. Sure they take some measures to secure accounts, but I will challenge you to prove me wrong. Pick up the phone and try to get someone on the phone from Google, Facebook or Twitter. Not only is their NO phone number but there is no live chat or even fraud text capability. If you have a problem, you have to fill out a form and send it in. The turnaround time is typically 48 hours. In a hackers world, that is like having a week to rob a museum.

4. Stopping the Avalanche – It can be pretty straight forward to prevent real avalanches from happening. However, if one starts, it is impossible to stop. This analogy is eerily similar to what is happening right now in the social networking world. With over 400 million people on Facebook, it is a very high value target. And if a hacker gets into your account, it is frightening to realize what they can do. For example, a good friend of mine (who is a social media expert and knows her way around the internet!) recently had someone hack her Gmail, Facebook and Twitter accounts. They locked her out and used detailed information about her past to try and spam her friends. Once in, they also started opening up lots of other accounts in very similar versions of her name. This way, when the accounts were finally closed, they could continue their scam…after all, they already had most of her information. The scariest part of the story was that there was very little she could do. The response from the social networking sites was shockingly poor and left her feeling quite helpless. The one big differentiator is that she had access to some of the world’s best internet security experts…do you?

So what does all of this mean? It means that we are seeing the signs of a significant perfect storm. Massive networks, highly valuable information, easily compromised platforms and almost no resources for victims means that we are on the brink of a massive avalanche of social networking fraud problems. Hopefully resources will be created that can truly help the victims AND hopefully the large social networking sites will take customer security more seriously. They hide behind the fact that they are a free service and they can’t afford to protect people because they don’t charge for their service. This is complete BS! They are NOT a free service and everyone needs to realize that. Sure they don’t charge you to access the site, but they create billions of dollars of value from your information and activity. They must be held to a higher standard and must protect the integrity of our social networks just as well or better than a bank. After all, they are hosting the details of our lives…and that is no small thing.

Richard Brasser
CEO –  The Targeted Group