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How Influencer Marketing Fraud Scams Businesses

Sam Bocetta Contributing Writer
Updated Jan 23, 2023

Before paying a social media influencer for posts, find out if their followers are fake.

Businesses strive to go where the market is. But, some struggle with how to really reach a new generation of consumers. If your brand seems out of touch, it can come off as pandering. This media-savvy generation can smell insincerity from a mile away. 

What they want is authenticity. 

So, many business owners turn to marketing professionals in an effort to generate the kind of scientifically-tested content that meets millennials where they live: in the world of social media. Some have decided that a great way to do that is to connect with a popular media influencer.

What is a social media influencer?

Social media influencers marry word-of-mouth advertising with the concept of going viral. The idea is that someone with a large social media following would also have a lot of influence on the tastes and trends of a very desirable demographic. What the Kylie Jenners of the world wear, eat, or care about makes an impression on their social media audience. 

Rather than trying to buy ads or game metrics by triangulating social media outreach efforts, marketers pay individuals with a large social media following to post about their client’s products and services.

However, whenever there’s lots of money and notoriety involved, fraud is sure to follow. 

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How fraud infiltrates influencer marketing

This brand of digital marketing fraud goes beyond bots and fake accounts, which major social media platforms claim to be working hard to clean up. Social media influencers are considered to be more genuine than some pro athlete or a Hollywood star who you know is getting big money in exchange for brand approval. 

Rising social media stars are sometimes called “micro-influencers.” They’ve risen to fame due to their popularity on platforms like YouTube and Instagram, and their intuition about trends allows them to penetrate niche markets with laser-like precision. The reason many are so influential is that they’re relatable. Unlike the Kardashian types, micro-influencers could be someone we know.

Celebrities like Beyoncé and Ariana Grande are legitimately popular stars, online and off. Their fans want to look and dress like them, use the same products and frequent the same places. They’re also outside of the pay grade for the average brand when it comes to endorsements. 

Social media influencers are a different story. Their fans still support their causes and mimic their tastes, but a company isn’t going to have to offer a $100 million contract for them to endorse their products. This category of influencer is within reach of emerging brands. The biggest influencers make up to $250,000 per social media post – which isn’t chump change but is considerably less than it costs for any of the Kardashian/Jenner clan to hold a Coke in their hand rather than a Pepsi. And, the ROI can also be substantial at this level.

So, where does fraud enter the picture?

Social media celebrity is becoming big business. It seems like everyone and their brother has a monetized YouTube channel or trending Instagram account. With all of the instant celebrity – as well as the bank accounts and benefits that come with it – a lot of people are defrauding their way onto the social media marketing gravy train. 

Popular influencers have a million followers or more, and top influencers have followers numbering in the tens of millions. It’s estimated that by 2020, brands will be spending close to $10 billion to get some of that market share. 

Approval from the right influencer can take a product from obscurity to must-have with just a few posts, or they can break a brand with a few negative words. But, what are companies getting for their advertising dollar? 

How to spot a fake influencer

Even some legitimately popular social media stars are unintentionally contributing to the fraud. The nature of social media celebrity, the rise and fall of trendy platforms, and the fleeting nature of fame mean that sometimes a valid number of followers doesn’t necessarily translate to actual engagement. 

Someone might have three million subscribers or followers but have very few who are still actively engaged on the platform. Most social media users just drift away from platforms after a while, meaning the numbers don’t actually reflect who’s still around. 

How can you tell? Look beyond the total number of followers at how many are actually engaged. What is the ratio of followers to the number of users the account is following? Is it balanced or fairly even? How many of the followers are from developing countries? There’s a large market for fake accounts and bot farms originating in these areas. 

Will Ellis, CTO of security research group Privacy Australia, has studied identity theft prevention and recommends looking closely at an influencer’s account history using an analytics tool Social Blade. He says that if you see a sudden increase in either followers or engagement (but not both) over a short period of time, the influencer might be buying social signals.  

The true cost of influencer fraud

While it’s estimated that companies will spend billions to purchase some social media street cred, a report by the cybersecurity company Cheq estimates that Instagram fraud alone will cost corporations about $1.5 billion within the next year. 

According to a Wall Street Journal story, a survey conducted by Points North Group found that media influencers with followings of 50,000 to 100,000 users (which is considered midlevel) pad their number of followers by up to 20%. 

What does that mean for marketers? When you’re paying someone thousands of dollars for a social media post that’s supposed to reach the feeds of 100,000 people, that number of users doesn’t actually exist; you’re wasting your money. 

You see, the money involved in user-generated content is leading to a sort of attention economy where everyone wants to be a celebrity. In an effort for that viral moment that will get them big-money endorsements and fame, fake influencers are buying followers and likes for as little as $16 per 1,000; you can even purchase them from vending machines in Russia

One influencer in Britain was charging 22 different brands $1,000 per media post to reach her 230,000 Instagram followers, 96% of which were non-existent. As it turns out, she was paying $2 for every 1,000 likes or shares per post, netting her a profit of $998 dollars per post – a big loss for the companies who paid for her “influence.”

The real fallout for the social media influencer industry is that companies are eventually going to stop throwing money at this new brand of “star” if they don’t come up with a way to weed out the rascals. There are plenty of easier ways to waste money than PayPal-ing it to a YouTube pipsqueak with delusions of grandeur.

Final thoughts about influencer marketing

Despite the risks of fraudulent followers, influencer marketing can be a great way to reach new demographics. Platforms are using AI and other technology to weed out those with fake followings from legitimately influential people, but the creator industry needs to step up its efforts to police its own influencers, and brands need to take a critical look at who’s influencing who before they invest in an illusion.

Image Credit: Youngoldman/Getty Images
Sam Bocetta Contributing Writer
Former defense contractor for the Navy. Security analyst and freelance correspondent for a number of media outlets. I find radical -- often heretical -- solutions to "impossible"? network security problems, and push early stage concepts from research to development. Program setup, people acquisition, deployment. Specialties: Naval engineering, Mechanical engineering, Marine Ops. Agile Management. InfoSec. Cryptography. Cyberwarfare & Cyberdefense. PRESENTLY: KRACK attack prevention, micropower systems defense. Writing my first book, democratizing personal privacy solutions for the broader public, due to publish in early 2021.