Twitter Tumbles as U.S. Weighs Security Reviews for Musk Deals; Documents detail plans to gut Twitter's workforce; Musk will own Twitter in a week; Another reason why TikTok should immediately be banned; How TikTok ate the Internet; Online Scams Cost Americans Billions; How my friend almost got scammed

1) Twitter (TWTR) is down a bit this morning because of this Bloomberg story: Twitter Tumbles as U.S. Weighs Security Reviews for Musk Deals. Excerpt:

Biden administration officials are discussing whether the U.S. should subject some of Elon Musk's ventures to national security reviews, including the deal for Twitter and SpaceX's Starlink satellite network, according to people familiar with the matter.

Twitter shares fell 5.1% as the market opened in New York on Friday.

U.S. officials have grown uncomfortable over Musk's recent threat to stop supplying the Starlink satellite service to Ukraine – he said it had cost him $80 million so far – and what they see as his increasingly Russia-friendly stance following a series of tweets that outlined peace proposals favorable to President Vladimir Putin. They are also concerned by his plans to buy Twitter with a group of foreign investors.

The discussions are still at an early stage, the people familiar said on condition of anonymity. Officials in the U.S. government and intelligence community are weighing what tools, if any, are available that would allow the federal government to review Musk's ventures.

One possibility is through the law governing the Committee on Foreign Investment in the United States to review Musk's deals and operations for national security risks, they said.

I think this leak is the government shooting a warning shot across Musk's bow, but that it's extremely unlikely to interfere with the deal that's set to close in seven days... so I view today's sell-off as a buying opportunity. I think shareholders are almost certain to receive $54.20 – $4 above the current price – in a week...

2) Speaking of Twitter and Musk, the Washington Post just reported that he plans to cut 75% of Twitter's workforce soon after he takes over the company: Documents detail plans to gut Twitter's workforce. Excerpt:

Twitter's workforce is likely to be hit with massive cuts in the coming months, no matter who owns the company, interviews and documents obtained by The Washington Post show, a change likely to have major impact on its ability to control harmful content and prevent data security crises.

Elon Musk told prospective investors in his deal to buy the company that he planned to get rid of nearly 75% of Twitter's 7,500 workers, whittling the company down to a skeleton staff of just over 2,000.

Even if Musk's Twitter deal falls through – and there's little indication now that it will – big cuts are expected...

The article, however, also contained this important line:

Twitter and Musk are expected to close the purchase by Oct. 28. Planning for the closing is moving forward in apparent good faith after months of legal battles, say people familiar with the negotiations who spoke on the condition of anonymity to discuss internal deliberations.

3) This Forbes article provides one more reason why I think TikTok should be immediately banned until it's transferred to 100% U.S. ownership: TikTok Parent ByteDance Planned to Use TikTok to Monitor the Physical Location of Specific American Citizens. Excerpt:

A China-based team at TikTok's parent company, ByteDance, planned to use the TikTok app to monitor the personal location of some specific American citizens, according to materials reviewed by Forbes.

The team behind the monitoring project – ByteDance's Internal Audit and Risk Control department – is led by Beijing-based executive Song Ye, who reports to ByteDance cofounder and CEO Rubo Liang.

The team primarily conducts investigations into potential misconduct by current and former ByteDance employees. But in at least two cases, the Internal Audit team also planned to collect TikTok data about the location of a U.S. citizen who had never had an employment relationship with the company, the materials show. It is unclear from the materials whether data about these Americans was actually collected; however, the plan was for a Beijing-based ByteDance team to obtain location data from U.S. users' devices.

If you need more convincing, read this essay by NYU marketing professor Scott Galloway: TikTok: Trojan Stallion.

4) While I've watched a handful of videos on TikTok, I haven't downloaded the app on my phone because I worry about getting addicted to it (as I did with video games in my teens – I could play Pac-Man for hours on one quarter).

However, I follow it closely because of its impact on our society (especially young people), the way China could use it to harm us, and the impact it's having on stocks I've recommended – most notably Meta Platforms (META), which owns Facebook and Instagram, and Alphabet (GOOGL), which owns YouTube.

Here's an insightful, in-depth Washington Post article about it: How TikTok ate the Internet. Excerpt:

The web's most popular app has reshaped American culture, hypnotized the world, and sparked a battle between two global superpowers...

Its dominance, as estimated by the Internet firms Cloudflare, Data.ai and Sensor Tower, is hard to overstate. TikTok's website was visited last year more often than Google. No app has grown faster past a billion users, and more than 100 million of them are in the United States, roughly a third of the country. The average American viewer watches TikTok for 80 minutes a day – more than the time spent on Facebook and Instagram, combined.

Two-thirds of American teens use the app, and 1 in 6 say they watch it "almost constantly," a Pew Research Center survey in August found; usage of Facebook among the same group has been cut in half since 2015. A report this summer by the parental-control tool Qustodio found that TikTok was both the most-used social media app for children and the one parents were most likely to block. And while half of TikTok's U.S. audience is younger than 25, the app is winning grown-ups' attention, too; the industry analyst eMarketer expects its over-65 audience will increase this year by nearly 15%. (AARP last year even unveiled a how-to guide.)

More than just a hit, TikTok has blown up the model of what a social network can be. Silicon Valley taught the world a style of online connectivity built on hand-chosen interests and friendships. TikTok doesn't care about those. Instead, it unravels for viewers an endless line of videos selected by its algorithm, then learns a viewer's tastes with every second they watch, pause, or scroll. You don't tell TikTok what you want to see. It tells you. And the Internet can't get enough.

"We're not talking about a dance app," said Abbie Richards, a researcher who studies disinformation on TikTok, where she has half a million followers. "We're talking about a platform that's shaping how a whole generation is learning to perceive the world."

TikTok's cultural influence on a new generation of media has led to some astounding ripple effects. Viral videos of people delighting in their favorite books, many of them with the hashtag #BookTok, which has 78 billion views, helped make 2021 one of the publishing industry's best sales years ever. Books from the author Colleen Hoover, BookTok's biggest star, have sold more copies this year than the Bible, according to data from NPD BookScan, which tracks sales at 16,000 stores nationwide.

5) The number of scams out there boggles my mind, as this article in today's Wall Street Journal highlights... Be careful! Online Scams Cost Americans Billions. Here's How to Avoid the Worst of Them. Excerpt:

For years now, scammers have found that they can make millions of dollars conning people using a variety of online methods. So how to avoid being scammed?

The bottom line, law-enforcement officials say, is that if you ever find yourself transferring money online, either to or on behalf of someone you've never met – stop. Even if you know who you're sending the money to, talk to them via telephone before you send the funds.

The Federal Bureau of Investigation's Internet Crime Complaint Center (IC3), which tracks online crime, in 2021 received a record 847,376 complaints, representing $6.9 billion in potential losses. Criminals continue to target corporations with scams such as business email compromise and ransomware, but many of the scams also target individuals.

These crimes can be devastating. According to the IC3, victims reported nearly $1 billion in losses to what the FBI calls "confidence" or "romance" scams, and $1.6 billion in losses relating to cryptocurrency scams.

6) Crypto-related scams are especially pervasive and costly, as this WSJ article highlights: A Text Scam Called 'Pig Butchering' Cost Her More Than $1.6 Million. I get texts like those described in the article from unknown people a couple of times a week and not only immediately block them, but report them as spam... Excerpt:

The text message on Jane Yan's mobile phone came from a number she didn't recognize. "Are we going to the salon tonight?" It looked like the kind of mistake that can happen any day.

In fact, it was part of a continuing scam that cost U.S. victims more than $429 million in losses last year, according to the Internet Crime Complaint Center, the Federal Bureau of Investigation's clearinghouse for consumer complaints about online crime.

Three months after beginning a conversation with the person who texted her, Ms. Yan had lost more than $1.6 million, the victim of a wave of messages that have flooded onto mobile devices this year via text message and social media, according to law-enforcement officials.

In Santa Clara County, Calif., complaints about these scams have skyrocketed over the past two years as people have become more accustomed to meeting and doing business virtually, said Jeff Rosen, the county's district attorney.

The scam preys on basic decency – the impulse to help someone who sends a message by mistake – and loneliness, Mr. Rosen said. "There are a lot of lonely people out there, and while the vast, vast majority of people are not going to respond to that kind of text, a few will," he said.

The average losses reported from these scams are $300,000, Mr. Rosen said.

The scammers are often based in Asia, where the con is known as "pig butchering" – a reference to the practice of first "fattening" the victim's cryptocurrency account with fake gains before the scam ends, according to advocacy groups and law-enforcement officials.

The Global Anti-Scam Organization, a nonprofit that works to help victims and raise public awareness on scams, has counted more than 2,000 victims so far, and they tend to be successful professionals, said Brian Bruce, chief of operations with the group. "They've got Ph.D.s; they're successful business owners; they're senior managers," he said. "One scammer said to me, 'We don't talk to Uber drivers or farmers.'"

7) Speaking of scams, I just learned about a new one from my friend Mike that almost cost him more than $2,000...

He listed his high-end racing bike on Craigslist, heard from someone named Rodrigo in Phoenix (or so he said), and agreed to sell it to him for $2,065.

Rodrigo sent Mike full payment via PayPal (PYPL) and asked him to ship the bike in two boxes, using labels Rodrigo sent him, because it would save money, so that's what my friend did.

A week later, Mike received an e-mail from Rodrigo saying that only one box had arrived, and another e-mail from PayPal saying Rodrigo had filed a complaint asking for his money back. Consequently, PayPal was taking the money back out of his account until the dispute was resolved.

This sounded fishy to me, so I Googled "PayPal shipping scam" and, sure enough, quickly found this article: How to Avoid PayPal Shipping Label Scams: Top Tips. Excerpt:

The Buyer Reroutes the Package to a New Location

If you use the shipping label the buyer has provided, they control the shipment since they are technically the "sender." They may route it to a non-existent shipping address, and the shipping carrier will not be able to deliver it. They will then call to correct the address and update the shipping information. Or, they may not use the shipping address on the PayPal receipt in the first place and have it sent to a completely different location. Either of these tricks results in the same thing.

The Buyer Gets Their Money Refunded – You Lose Your Money and Item

All the buyer has to do to get their money back is file a complaint with PayPal – they simply have to say they never received the item. The buyer will win their claim if the product was not shipped to the address on the PayPal receipt.

If the scammer reroutes the shipment, you, as the seller, can't prove that the buyer received it. PayPal's policy will refund the purchase price to the buyer even though the buyer also has the item.

You also won't be covered by PayPal's Seller Protection Policy because it requires that purchases be shipped to the address on the PayPal Transaction Details page.

Here are the lessons:

To avoid falling victim to scams involving PayPal shipping labels, always follow these best practices:

• If a buyer asks to use their prepaid shipping label, don't. Don't buy into it even if they claim you'll save on shipping costs.
• Only ship products to the address shown on PayPal's order details page.

• Insist on a signature confirmation on delivery of high-value items. 

• Conduct transactions through a PayPal merchant account to be covered under PayPal's Seller Protection policy.
• Block customers that make fraudulent claims or who file disputes. They will only try again.

It's a particularly clever scam because Rodrigo had him send the bike in two boxes and one arrived, which makes it look more legitimate...

The good news is that before Rodrigo filed his bogus claim, Mike had already transferred every penny out of his PayPal account to his bank account (not because he suspected fraud... he just needed the money to pay bills), so PayPal can't reclaim the money.

PayPal is furious about this, showing a negative balance in Mike's account with a warning in big red letters telling him to fund it, but of course Mark's going to do no such thing. Instead, he reported the scam to PayPal's Resolution Center, demanding that the company rule in his favor and remove the negative balance on his account so he can start using the service again.

I'll let you know how PayPal responds...

To repeat: Be careful anytime you're conducting any financial transaction with someone you don't know! Fraudsters are everywhere these days, and their scams are increasingly brazen and clever.

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.