More than 46,000 people reported to the FTC that they lost over $1 billion in scams involving cryptocurrency from January 2021 through March 2022. Only a small percentage of people report scams, so the actual numbers are likely much higher.
The reports indicate that cryptocurrency is becoming the payment of choice for many scammers. Losses in 2021 were almost 60 times the losses reported in 2018. Crooks like cryptocurrency because:
Over half of the reported losses involved bogus investment opportunities. Scammers promised big returns for investing in cryptocurrency and in some cases had websites and apps that claimed to track the growth of the investor’s portfolio. Some allowed investors to make a small “test” withdrawal. But like Bernie Madoff’s Ponzi scheme, the impressive returns ended up being fake. When people tried to cash out, they were required to send more cryptocurrency to pay fees and still didn’t get their money back.
The next most common scheme involving cryptocurrency were romance scams in which a new love interest convinced the victim to invest in cryptocurrency or send the crook cryptocurrency for some reason. They were followed by business and government impersonation scams in which victims were told their money was at risk because of fraud or a government investigation, advised they needed to convert it to cryptocurrency, and ultimately tricked into letting the crooks steal it.
A particularly scary cryptocurrency-related scam starts with an email claiming the crook has installed spyware on your computer and recorded embarrassing or compromising photos or videos of you. The crook threatens to send them to your contacts unless you pay a ransom in cryptocurrency and even includes a link to a website that explains how to buy and transmit it.
People ages 20-49 were three times more likely than older consumers to report losing money in a cryptocurrency scam, with those in their 30s being the most vulnerable. But the median dollar losses were the highest for people in their 70s – almost $12,000.
The FTC calls cryptocurrency and social media a “combustible combination.” Nearly half the reports it received said the scam originated with an ad, post, or message on a social media platform. When a platform was specified, 32 percent said Instagram, 28 percent Facebook, 9 percent WhatsApp, and 7 percent Telegram. The FTC issued a separate report recently saying that scams of all kinds are flourishing on social media.
The FTC and BBB offer these tips to avoid being victimized by cryptocurrency and other kinds of scams:
Only scammers guarantee profits or big returns. There’s nothing low-risk about cryptocurrency investments. Cryptocurrencies tend to be more volatile than more traditional investments; an investment that’s worth thousands of dollars today might be worth only hundreds tomorrow.
Only scammers will require you to buy or pay in cryptocurrency.
A love interest you’ve met online who wants you to invest in cryptocurrency or send cryptocurrency for some reason is a crook. This advice applies to any request for money in any form from a love interest you’ve never met in person.
Randy Hutchinson is president & CEO, BBB of the Mid-South.
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