FTC reports huge spike in cryptocurrency investment scams

Since October 2020, consumers have reported losing more than $80 million to cryptocurrency investment scams, an increase of more than ten-fold year-over-year, according to a new data analysis from the Federal Trade Commission.

In a new consumer protection data spotlight, the FTC breaks down the contents of nearly 7,000 reports received from consumers about these scams in the last quarter of 2020 and the first quarter of 2021. The median amount consumers reported losing to the scams was $1,900.

The spotlight notes that cryptocurrency investment scams take on a variety of forms, sometimes starting as offers of investment “tips” or “secrets” in online message boards that lead people to bogus investment websites. Another common form of the scam involves a promise that a celebrity associated with cryptocurrency will multiply any cryptocurrency you send to their wallet and send it back. In fact, consumers reported losing more than $2 million to Elon Musk impersonators alone since October.

The spotlight notes that consumers age 20 to 49 were over five times more likely than older age groups to report losing money to a cryptocurrency investment scam, and that in the six-month period covered by the spotlight, consumers in their 20s and 30s lost more money to investment scams than any other form of fraud. More than half of their investment scam losses were in cryptocurrency.

Christopher Leach with the Federal Trade Commission says this is not likely to end, “The problem is because it is new, a lot of people might not be familiar with the ins and outs of it, so as a result, scammers filling the void and trying to take advantage of that lack of information and customers interest in making money on a new opportunity.”

To make sure you don’t become a victim, lookout for the following:

  • Don’t accept a demand to pay using cryptocurrency
  • Promising recruitment rewards to bring in other investors
  • Unsolicited offers requiring you to pay in crypto
  • Never need to send money to cash out

While plenty of people have gotten rich with cryptocurrency, it’s obvious not everyone can, and at some point, there will be a consolidation of the different currencies leaving some people out.

RESOURCES

Reporter:Rich Kolko
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