ROCKFORD (WREX) — Scams involving a new and trending type of financial investment is causing concern for many people with cryptocurrency.
A study from the Better Business Bureau found a rise in fraud and financial losses related to cryptocurrency scams.
The rise in cryptocurrency is concerning, according to Dennis Horton, Director of the Rockford Regional Office of the BBB, because there is not much that is well-known about the digital payment system.
“This has created a fertile environment for scams,” Horton said. “In fact, a virtual tug of war exists between the legitimate and fraudulent use of cryptocurrency.”
According to data just released from the BBB, complaints involving cryptocurrency doubled in 2021 and tripled from 2019. The BBB says the complaints in 2021 total $8 million in losses in scams involving cryptocurrencies.
An important aspect of cryptocurrency is that it operates outside of the traditional banking system, and is therefore not subject to the same protections as bank deposits or credit card transactions.
“Scammers will ask people to invest in cryptocurrency or ask them to pay with cryptocurrency,” Horton said. “Cryptocurrency scams climbed from #7 to #2 on BBB’s list of riskiest scams posing the most significant risk to consumers because of the high rate of people being susceptible to these scams and the biggest losses of any scam averaging over $1,000 per incident.”
The BBB says scams involving cryptocurrency most commonly come from social media, some with scammers impersonating a victim’s friends to tell them about their individual success in investing in cryptocurrency.
Cryptocurrency is also playing a large role in other kinds of scams, according to the BBB. Ransomware scams have increasingly demanded payment through cryptocurrency as well as in fraudulent online sales, advance fee loan scams, employment scams, extortion scams, government impostor fees and more.
The BBB has tips on how you can avoid cryptocurrency scams:
- If you buy cryptocurrency, the security of the wallet is of prime importance. If you lose the key, then your funds are gone permanently.
- Looking for an exchange with an internet search engine may lead to fake sites which advertise and impersonate actual companies.
- Do not pay for products with cryptocurrency.
- Scam companies sometimes claim that they can recover stolen money for a fee.
- Scammers often create fake reviews for their own companies.
- Be wary of celebrity endorsements. They 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.
- Be careful about 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. Call your friend by phone to see if it is really them.
- Only download apps from Google Play or the App Store. Trusted app stores do not eliminate the threat of app scams, but they offer a basic protection level.
- Do not believe in promises of guaranteed returns. No one can guarantee how an investment will perform.
If you see or are a victim of a scam, you can report it to the BBB, the Federal Trade Commission, or the Internet Crime Complaint Center.