Cryptocurrency is being used in other scams, according to the Bureau. According to the research, romance fraudsters have begun to persuade victims to invest in cryptocurrency through sophisticated fake apps, then vanish with the money when the victim tries to withdraw the funds. According to its notes, ransomware scams frequently demand cryptocurrency as payment.
Cryptocurrency, according to the Better Business Bureau, is the hottest new trend in investing, and there is still a lot to be learned about the digital payment system that does not rely on banks to authenticate transactions. According to its most in-depth investigation, “a virtual tug of war exists between the legitimate and fraudulent use of cryptocurrency,” this has created the ideal climate for scammers. According to the BBB, the study, titled Cryptocurrency Scams: BBB Study Finds Lack of Regulation and Consumer Education Leads to Dramatic Increase in Fraud and Financial Losses, delves into the many layers of cryptocurrency and how criminals have used the market to steal from investors and victims of common scams.
Cryptocurreny - What’s All the Hype About?
The phrase “cryptocurrency” has gotten a lot of popularity, thanks to the mystery, thrill, buzz, and, perhaps most crucially, confusion around it. Although many of us have heard of cryptocurrency, we are unfamiliar with its intricacies. It’s uncontrollable, untraceable, and untouchable – it’s just lines of computer code. As a result, it’s a con artist’s dream. The Bitcoin mania is spreading, and more and more individuals are looking for methods to participate. Even the most clear-headed consumers are clouded by a shroud of confusion for newbies. It’s resulted in a virtual tug-of-war between genuine and fraudulent bitcoin use. A lack of enforcement and consumer education, according to a recent study published by the Better Business Bureau, leads to a considerable increase in fraud and financial losses.
In fact, in the last three years, reports of bitcoin fraud have tripled. BBB received 1,215 Scam Tracker reports in 2021, resulting in a loss of $7,953,502. These scams are primarily aimed at the younger generation, with the 25-34-year-olds being the most common victims, followed by the 35-44-year-olds. According to reports, the most common ways for these frauds to be perpetrated are through social media and celebrity endorsements.
BBB President and CEO Jim Hegarty remarked, “This groundbreaking study sheds light on the latest series of scam trends we’ve monitored.” “Cryptocurrency is here to stay, and we want to ensure our communities are aware of the potential for scam-related activity in these relatively new markets.” A cryptocurrency, according to the Bureau, is a type of digital money that uses encrypted technology to allow anybody, anywhere, to send and receive payments. It stated that it does not exist in a physical form, such as paper money, but rather as lines of computer code supported by a decentralized computer system called a blockchain and kept in a crypto wallet.
According to BBB, Bitcoin, which was founded in 2009, is the most popular cryptocurrency according to BBB. It can be purchased at tens of thousands of Bitcoin ATMs and is becoming more widely accepted as payment in retail purchases. According to the survey, Ethereum is the second most popular cryptocurrency and a crucial component of non-fungible tokens (NFTs), which are digital assets like images or music purchased with cryptocurrency as an investment. Cryptocurrency, according to the Bureau, works outside of established financial systems and is not subject to the same safeguards as bank deposits or credit card transactions.
Huge Financial Losses of $750 Million Due To Crypto Scams
According to the BBB, victims of huge financial losses as a result of crypto-related frauds have increased dramatically. It stated it got over 2,400 complaints in 2021, with about $8 million in losses involving crypto firms. The BBB Scam Tracker reports tripled between 2019 and 2021 and reported losses tripled in the last two years, according to the organization. With losses of $750 million, cryptocurrency was the second-highest scam reported to the Federal Trade Commission in 2021, according to the Bureau. The FBI’s Internet Crime Complaint Center and the Canadian Anti-Fraud Center also reported significant increases in reports and losses, according to the report.
The majority of residents do not report being defrauded, according to the research, so losses could be far higher. Cryptocurrency, according to BBB, has three fundamental properties that make it appealing to scammers. Crypto is uncontrolled and difficult to recover when stolen, according to the report; it is immensely popular, propelled by celebrity endorsements; and it is little understood by the general public.
According to the study, cryptocurrency markets provide new opportunities for tried-and-true investment frauds such as Ponzi schemes and fraudulent ICOs (initial coin offerings), especially given the development of new currencies and the lack of protection provided by the government regulation for more traditional investors. A victim claimed to lose $1,500 after viewing a friend’s Instagram post with pictures of deposits being made into his bank account and thinking he was getting in on a fantastic deal. When he messaged a friend to ask if it was real, he was directed to someone else totally, an “investment guide.” The victim paid a $1,500 initial deposit after believing this was a legitimate referral from a friend, and his bitcoin account was formed – which rapidly witnessed big growth.
However, the “investment guide” persisted in demanding additional money, stating that his account needed to be upgraded. When the victim expressed skepticism, the con artist reminded him that he was assisting his friend, the one who had suggested him. It turned out that his friend’s Instagram account had been hacked, and his entire social media network had been duped into this financial scam. Even after recognizing it was all a scam, the victim was never able to retrieve his funds or recover his investment.
Crypto & Romance Scams Have Combined To Create a New Hybrid Scam!
Cryptocurrency is being used in other scams, according to the Bureau. According to the research, romance fraudsters have begun to persuade victims to invest in cryptocurrency through sophisticated fake apps, then vanish with the money when the victim tries to withdraw the funds. According to its notes, ransomware scams frequently demand cryptocurrency as payment. Crypto is also a widely requested payment method in fraudulent online sales, advance fee loan scams, job scams, extortion scams, government impersonator fees, and more, according to BBB Scam Tracker data. Crypto is frequently utilized in illegal activities on the dark web, according to the report, and it is also employed in money laundering.
Law enforcement authorities have pursued cases involving big bitcoin losses and the use of cryptocurrency in criminal behavior, according to the Bureau. It claimed that in 2022, the US Department of Justice made arrests in cases involving billions of dollars in crypto laundering. BBB’s Scam Tracker is a tool for consumers to track and/or report scams if they suspect fraud. If your experience was deceptive, this tool might be useful in preventing future victims. Visit trust-bbb.org for further consumer advice.
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