Meet the Retiree Who Ended up Wasting $25,000 on Tipping Influencers and Struggled to pay Bills
Cindi White, a 65-year-old retiree from Burlington County, New Jersey, found solace in TikTok during the COVID-19 pandemic. Previously disinterested in social media, White's travel-filled retirement was halted by the pandemic, leading her to seek new forms of engagement. An injury in early 2021 further isolated her, pushing her towards the video-sharing platform for social interaction, per Asbury Park Press, and TikTok battles took over her life.
The allure of TikTok Battles: A costly engagement
TikTok's introduction of TikTok Battles in 2020 amid the pandemic, presented a unique engagement format. These battles involve live-streams where two users compete for tips from viewers. TikTok Battles is designed with the addictive elements of a video game, with fans competing among themselves about who can tip their favorite influencer the most. The battles use the design strategy of "monetized rivalries," where fans exchange their real dollars for tokens called Coins before buying gifts and end up forgetting how much they are spending.
TikTok Battles are the largest popularity contests on the internet as they also have a reward system in place. The platform also established a daily scoreboard, creating a competitive environment for both streamers and viewers. Viewers purchase tokens to tip streamers, receiving badges for their spending levels. These badges, reaching a top level at $848,000 in tips, symbolize the user's status within the TikTok community. Top battlers on TikTok earn a spot a place on the platform's Daily Ranking, which is a 99-person leaderboard made up of TikTok's highest-grossing live-streamers, and top US influencers can earn as much as $328,000 in a day.
Financial fallout: The price of virtual interaction
White had spent more than $25,000 by May 2023, according to transaction records and bank statements reviewed by Business Insider. "I was struggling to pay my bills," she said. This expenditure was primarily driven by her involvement in TikTok Battles, where she spent up to 50 hours a week and around $100 daily at her peak engagement. Business Insider's interviews with over 15 TikTok participants revealed a pattern of addiction-like behavior towards these battles, with many users experiencing financial difficulties. Many social media users confessed to having spent their entire incomes on virtual gifts, ending up in debt, and struggling to pay their bills. For fans like White, the acknowledgment from a favorite streamer during a live battle creates a sense of personal connection, compelling them to spend more.
People are also overspending on TikTok Shop
Other than TikTok Battles, US consumers are incurring large expenditures on TikTok Shop, launched in September 2023. The followers or the consumers can directly buy from these shops, a kind of experience Instagram and Facebook offer. 67% of TikTok users say TikTok inspires them to shop even when they don't mean to. Hence, purchases on TikTok are not motivated by need but by the influence of an individual or campaign. This can lead to an increase in expenditure especially among the youth and can make them careless about money management.
In conclusion, TikTok's innovative engagement strategies have created a new virtual social hierarchy. While it provides users with a sense of community and recognition, it also poses significant financial risks, as seen in the case of Cindi White and many others.