The eSafety Commissioner has accused the platforms of failing to address blind spots when detecting abuse, with young men aged 18 to 24 revealed to be the most common victims.
More than 2000 complaints about sexual extortion were received by the online safety watchdog in 2025's second half.
Instagram and WhatsApp were the most cited platforms of concern for the complaints, with Apple's iMessage and Snapchat following close behind for users under 18.
Sexual extortion, also known as sextortion, refers to a form of blackmail where a person threatens to share a nude or sexual image or video unless the victim gives in to their demands.
The report found younger teens were increasingly being targeted by scammers, eSafety Commissioner Julie Inman Grant said.
The findings should spark urgent action for online platforms, she told ABC Radio National on Tuesday.
"Sextortion has reached catastrophic proportions, I'd say, with Australian boys and young men being brutally targeted by organised criminal networks every day," Ms Inman Grant said.
"These offenders are exploiting these very predictable weaknesses in platform design."
The report exposed significant gaps in how major online platforms are tackling child sexual exploitation and abuse.
It cited challenges in detecting harm in private messaging and video environments, where sexual extortion and live-streamed sexual abuse can thrive.
The watchdog called on tech companies to adopt a comprehensive, multi-layered approach that combined proactive detection tools, and accessible reporting systems.
''Offenders are continuing to exploit gaps in platform design, weak detection systems and inconsistent safeguards to move seamlessly between services and escalate harm against children," Ms Inman Grant said.
''The goal is often quick financial gain, with perpetrators using high-pressure tactics to force victims into paying.
"This form of extortion can cause high levels of stress, panic, psychological distress and financial loss."
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