Investors aren’t the only ones cashing in on the promises of wealth that digital currencies offer, whether for the short-term or long-term. Unfortunately, many cybercriminals have taken advantage of the latest investment craze to scam people out of their money.
According to the Federal Trade Commission (FTC), there’s been a ten-fold increase in such scams over the past year. Recent reports found that a median amount of $2,600 was lost to crypto scams. Since 2021, nearly 50,000 investors have lost over $1 billion, which is sixty times what it was in 2018.
Hackers are finding ways into people’s crypto wallets through various channels, from fake investment websites to Google ads and video games. While those 20 to 49 years old are five times more likely to get scammed than older consumers, nobody is immune to cyberattacks. That’s because crypto isn’t connected to a bank that can stop suspicious transactions. Also, once your crypto's gone, there’s no getting it back because transfers can’t be reversed, and there’s no legal protection when using it to make purchases. Lastly, most people still don't understand how crypto works, which makes them all the more vulnerable.
Scammers either trick you into sending crypto or gaining access to your crypto wallet. These crypto scams run rampant every time you turn on your computer or use your smart device. Please don't despair; we’ve researched how to help you stay informed and avoid scammers. Here are the three top crypto scams to watch out for in 2022.
1. Crypto Investment Scams
Of all types of crypto fraud, investment scams top the list with $575 million in losses since 2021. These scams usually offer false promises of easy ways to make a lot of quick cash. People who are inexperienced or have little knowledge of crypto are easy targets for these cyber criminals.
Investment scams are widespread on the Internet. In particular, people are targeted through popular social media. The top social sites crypto scammers use include Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (7%).
If you send crypto to be invested, it’s likely a scam if you notice the following:
The investment website or app looks real.
It appears like you can track your crypto investment’s performance.
You’re able to withdraw a small amount as a test.
Despite how it looks, these fraudulent tactics are all a farce. Try to cash your entire investment, and you’ll be in for a rude awakening. Scammers may tell you the withdrawal requires you to send more crypto to pay extra fees. In the end, there’s nothing you can do to get your money back. The websites and apps aren’t real and are nearly impossible to trace back to the criminals. Usually, when the scammers realize you’re on to them, the website disappears, or you get locked out of the app.
Tip to Avoid Scammers: Never download unknown apps, provide sensitive information to unknown websites, or send crypto to perfect strangers.
2. Romance Scams
The iconic Beatles band made famous the phrase, "all you need is love." More than half a century later, finding love on dating sites and apps have become the norm. The FTC reports romance scams as the second leading crypto scam responsible for a loss of $185 million since 2021.
These cyber criminals create fake profiles on social media and dating apps, luring hopeless romantics into their lair. Tinder, Hinge, Bumble, and many other dating apps are fair game for scammers. As you get to know the other person, they may either offer to show you how they became rich or ask for your help.
Pay close attention to their actions, which can clue you in that they’re trying to scam you:
They express interest in a relationship and meeting you but say they live in another country.
They want to talk to you in private on a different app they provide.
You're sent tips about how to make money by investing in crypto.
You’re given a link to download a crypto investment app.
They ask for money, gift cards, or crypto to help with an emergency.
Most people report being attracted to a potential mate’s wealthy lifestyle or sophisticated demeanor. The scammers stick around until you decide to end the relationship or try to get your money back. In exchange for a median individual loss of $10,000, victims end up with nothing more than learning how to send crypto to scammers. Their money is long gone, along with their fake heartthrob.
Tip to Avoid Scammers: Do a reverse lookup of photos in the interested person’s profile and compare names and personal information. Ask for ID and credentials whenever someone offers professional advice using your money. Chances are they used someone else’s images or downloaded them from stock photo websites.
3. Business and Government Imposter Scams
Imposter scams where criminals pretend to be a business or government agency caused people to lose $133 million worth of crypto since 2021. The scammers pose as a familiar company or government official, alerting you of some fraudulent activity and making you think that you'll lose a lot of money if not resolved. Sometimes, you’ll be made to think you won a big prize and must send crypto to prove your identity and claim it.
Here are a few ways scammers might attempt to get you to send crypto:
You receive text notifications about an unauthorized Amazon purchase.
Online popups appear on your computer that look like a Microsoft security alert.
Border patrol agents saying your account will be frozen for drug trafficking investigations.
Messages notifying you of winning prize giveaways.
In most cases, you’ll be instructed to send crypto to fix or protect your accounts. This is commonly done by depositing cash through a crypto ATM. The scammer typically sends you a QR code to scan at the machine, which ends up transferring the crypto into the scammer’s wallet.
Tip to Avoid Scammers: To be on the safe side, always go directly to the named company’s website to log into your account or call customer service. Most government agencies are aware of these common scams and frequently post warnings on their websites.
Final Thoughts
There are many sneaky methods that scammers use to trick people into sending crypto or accessing their crypto wallets. In some cases, it can be hard to avoid, such as hacked blockchains or fraudulent digital currency hitting the mainstream. However, there are precautions you can take to avoid being duped by crypto scammers posing such as investment advisors, romance partners, and legitimate businesses.
FYEO Identity combines privacy and security into a single decentralized identity management application for both your browser and mobile device, so you can manage all of your passwords/credentials and keep tabs on where previous credentials and passwords have been exploited with real-time identity monitoring, for free. Sign up to be an early adopter today!