BBB study: Cryptocurrency scams on the rise
There’s a lot of buzz around cryptocurrency. The mystery, the thrill, the hype, and maybe above all, the confusion. While many of us have heard of cryptocurrency, many are unfamiliar with the ins and outs of this digital form of currency. It’s unregulated, untraceable and untouchable – it only exists as lines of computer code.
Which makes it a con artist’s dream.
The cryptocurrency craze is growing, with more and more people looking to find ways they can get in on the action. But to novices, there’s a blanket of confusion clouding even the most clear-minded consumers.
It’s created a virtual tug of war between the legitimate and fraudulent use of cryptocurrency. And a new study released by Better Business Bureau unveils that the lack of regulation and consumer education results in a dramatic increase in fraud and financial losses.
In fact, reports of cryptocurrency fraud have tripled in the past three years. In 2021, BBB received 1,215 Scam Tracker reports resulting in $7,953,502 lost. And these scams are targeting a younger generation with the largest age group of victims being 25-34-year-olds followed by the 35-44 age bracket. The main avenues for perpetrating these scams are reportedly via social media and celebrity endorsements.
What does a cryptocurrency investment scam look like?
A victim reported $1,500 in losses when he thought he was getting in on a great opportunity after seeing a friend’s Instagram post featuring screenshots of deposits being made into his bank account. When he messaged his friend to determine if it was legitimate, he was referred to someone else entirely, an “investment guide”. Thinking this was his friend’s reliable referral, the victim sent an initial investment of $1,500 and his bitcoin account was opened – which quickly saw a significant increase
But the “investment guide” kept asking for more money, claiming his account needed to be upgraded. When the victim was hesitant the scammer reminded him that he helped his friend, the one who had referred him. Well, it turns out his friend’s Instagram account had been hacked and his entire network of social media friends were now being coaxed into this investment scam. Unfortunately, even after realizing it was all a fraud, the victim was never able to recover his investment or access his funds.
If you’re looking to invest in cryptocurrency, BBB recommends these tips:
• Guard your wallet. If you buy cryptocurrency, the security of the wallet is your ultimate line of defense. If you lose the key – a sequence of letters and numbers that allow you access to your cryptocurrency – then your funds are gone permanently.
• Do not believe promises of guaranteed returns. No one can guarantee how an investment will perform.
• Be wary of celebrity endorsements. It can be tempting, but those endorsements are often not authorized and even if they are, the celebrity may be paid for the effort and may not know more about it than you do.
• Use caution with claims made on social media. Be wary of “friends” who reach out to you on social media and tell you how they made money with cryptocurrency. Accounts are frequently compromised. Call your friend by phone to see if it is really them.
If you suspect fraudulent behavior, BBB’s Scam Tracker is a tool for consumers to track and/or report scams. If your experience is indeed fraudulent, this tool could play a role in protecting future victims.
For more consumer tips, visit trust-bbb.org.