A growing number of British investors face the threat of falling victim to fraudulent schemes propagated through a surge in counterfeit advertisements on social media, as warned by Lloyds Bank. Reports of crypto scams by victims have increased by 23% this year compared to the same period in 2022.
The Tactics of Crypto Scams
Organized criminal groups orchestrating these scams continually adapt their tactics to capitalize on emerging trends, particularly focusing on enticing younger investors with the allure of ‘get rich quick’ promises in cryptocurrency trading. The age group most commonly falling prey to crypto scams is 25 to 34-year-olds, constituting a quarter of all cases.
Prospective Investors Lured In: The Scourge of Crypto Scams
Prospective crypto investors typically make three payments on average before realizing they have been scammed, usually taking around 100 days from the initial transaction before reporting it to their bank. By this time, the funds are often irretrievable.
Revolut is identified as the primary recipient of Faster Payments from victims of crypto investment scams at Lloyds Banking Group, although these funds may subsequently be redirected elsewhere.
Recognizing Crypto Scam Warning Signs
While legitimate cryptocurrency investments carry inherent risks, it’s crucial to be aware that fraudsters employ sophisticated methods to present themselves convincingly. This includes establishing fake companies, social media profiles, and websites to mimic legitimate entities. They may even create professional-looking investment literature.
Crypto scammers typically employ two main approaches:
- The Illusion: Involves presenting a non-existent investment platform or cryptocurrency. The fraudster, often posing as an ‘investment manager,’ assures victims that their payments will be invested on their behalf, accompanied by promises of substantial returns. Fake investment accounts or small transfers to victims’ bank accounts serve to maintain the illusion.
- The Takeover: Involves using the victim’s name to create an actual investment account registered with legitimate platforms like Coinbase or Binance. Victims may be tricked into providing account login details or relinquishing control of their digital wallets, enabling fraudsters to transfer funds or cryptocurrency at their discretion.
Cryptocurrency payments may also feature in other scams, such as romance scams or impersonation scams. Any request for payment using cryptocurrency should raise immediate suspicion.
Tips to Guard Against Crypto Investment Scams
- Beware of Social Media: Fraudulent crypto investment ads are prevalent on social media platforms. Unsolicited offers promising exceptional returns or ‘guaranteed’ profits are likely scams.
- Verify Authenticity: Counterfeit companies, social media profiles, and websites are common tactics used by fraudsters. Use the FCA website to find genuine contact details and check for warnings about fake entities. Conduct independent research or seek professional financial advice.
- Check for Warnings: Legitimate crypto ads are regulated, featuring prominent warnings about the risks. Avoid offers of free gifts or referral bonuses.
- Keep Information Private: Never share login details or private cryptocurrency keys. Legitimate firms do not request this information. Losing control over transferred funds to an account not in your name is a clear sign of a scam.
- Secure Payment Methods: Paying by bank transfer makes it challenging to recover funds in case of a scam. Verify that the account names match to avoid falling victim. Card payments offer greater protection.
Disclaimer: CryptoNewsBytes does not provide investment, financial, or legal advice. The content on the Website must not be taken as professional advice and should not be relied upon for making financial decisions. It is advised to consult with a qualified professional for advice concerning your particular situation.