Cryptocurrency Scams: A new twist on an old attempt to steal your money

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Cryptocurrency investments have become quite popular in the last few years, and scammers are cashing in on people’s interest in the digital money. 

Highlights:

  • According to the Federal Trade Commission, since October 2020, losses from cryptocurrency investment scams have added up to more than $80 million.
  • People in their 20s and 30s have lost more money on investment scams than on any other type of fraud. 
  • People 50 and older were far less likely to report losing money on cryptocurrency investment scams.
  • The North Dakota Attorney General Consumer Protection Division says, although cryptocurrency scams are relatively new, they have received reports of these scams in the state.

The FTC reports, since October 2020, 7,000 people reported losses to fake cryptocurrency investments, adding up to more than $80 million on these scams. People ages 20-49 were more than five times more likely than other age groups to report losing money on those scams.  

The numbers are especially striking for people in their 20s and 30s: this group reported losing far more money on investment scams than on any other type of fraud,6 and more than half of their reported investment scam losses were in cryptocurrency. The median amount consumers ages 20 to 49 reported losing to the scams was $1,900. Compared to the same period a year earlier, the numbers of scam reports increased twelve times more, and nearly 1,000% more in reported losses, the FTC said. 

People 50 and older were far less likely to report losing money on cryptocurrency investment scams. But when this group did lose money on these scams, their reported individual losses were higher, with a median reported loss of $3,250. 

How to spot a cryptocurrency scam

Cryptocurrency investment scams take on a variety of forms:

  • Online, people may appear to be friendly and willing to share “tips” or “secrets” that will lead victims to bogus investment sites. The more you put in, the bigger the supposed return.  
  • Sites may use fake testimonials and cryptocurrency jargon to appear credible, but any promises of enormous, guaranteed returns are simply lies.  
  • “Giveaway scams” supposedly sponsored by celebrities or other known figures in the cryptocurrency space that promise to immediately multiply the cryptocurrency you send are a huge red flag. For example, people have reported sending more than $2 million in cryptocurrency to Elon Musk impersonators over just the past six months. 
  • Scammers even use online dating to draw people into cryptocurrency investment scams. About 20% of the money people reported losing through romance scams since October 2020 was sent in cryptocurrency, and many of these reports were from people who said they thought they were investing. 

Many people have also told the FTC they loaded cash into Bitcoin ATM machines to pay imposters claiming to be from the Social Security Administration. 

Have cryptocurrency scams been reported in North Dakota? 

The Director for the North Dakota’s Attorney General’s Consumer Protection Division, Parrell Grossman, says his department has had at least two or three reports from consumers who have taken some “heavy losses.” 

These scams involved online dating as well as claims of a family member emergency, what used to be called the “grandparent scam,” which typically works something like this: The victim gets a call from someone posing as his or her grandchild. This person explains in a frantic-sounding voice that he or she is in trouble and money will need to wired to resolve the issue.  

“The larger losses were relating to the common romance scam,” explained Grossman. “In one case, an individual got hooked up with a fake person she believed to be a doctor or a person working on an oil rig, and he gave her a number of excuses of why he needed some financial help and part of his request was payment in Bitcoin.”

The victim lost close to $40,000 dollars in total, but not all that money was paid via bitcoin. Grossman says “it was a combination of payments.” 

“I think when we, as ordinary consumers, hear any solicitation that either starts with or eventually leads to a discussion about going to a cryptocurrency machine or a bitcoin machine and sending money, it is a fraud,” Grossman advises.

What do I do if I am a victim of this type of fraud? 

Report fraud and other suspicious activity involving cryptocurrency to:

  • The FTC at ReportFraud.ftc.gov 
  • The Commodity Futures Trading Commission (CFTC) at CFTC.gov/complaint 
  • The U.S. Securities and Exchange Commission (SEC) at sec.gov/tcr 
  • The cryptocurrency exchange company you used to send the money 
  • Your local law enforcement
  • Local Attorney General’s office

Other types of scams to watch out for include (Seen in North Dakota): 

Threatening Message Scam: Attorney General Wayne Stenehjem reminds North Dakota residents to ignore any telephone message that threatens them with arrest unless they return the call immediately.

IRS Enforcement Calls: If you received a message threatening your immediate arrest or claiming that you owe money on your taxes, just delete it.

Sweepstakes Scams: If you receive a call claiming that you have won a prize in a sweepstake, beware.

Online Classified Ad Scams: If you respond to an online classified ad, be careful. Scam artists post fraudulent ads to “sell” everything.

Computer and Tech Support Scams: Did your computer suddenly display a pop-up warning that there are problems with your computer? STOP! These are the warning signs of a scam. 

Jury Duty Scams:  

  • No court will ever make calls threatening to arrest someone for having missed jury duty
  • No legitimate government official or law enforcement officer will ever demand that you mail cash, wire money, or buy prepaid cards to pay fines and fees.

Foreign Lotteries: If you receive a letter, email or phone call that you have won a prize in a contest or lottery, don’t get too excited – it’s a scam. 

Work at home schemes: Crooks advertise online, in news groups or send e-mails offering tempting work opportunities that can be done at or from home. 

Scholarship search scams: Parents and students feeling the crunch of increasing college tuition and decreased financial aid sources are wasting good money on financial aid “search” services. In fact, college financial aid offices provide much of the same information at no charge.

Inheritance/Beneficiary Scams: A long-lost uncle died and you are the only remaining heir to a fortune, just sitting in a bank in a foreign country. Of course, before you can claim it, you’ll need to pay some fees, to the bank, the foreign government, or the supposed official who contacted you. You may also be asked to complete official-looking paperwork and provide personal information such as your date of birth and social security number, so they can “verify” that you are the beneficiary. STOP! It’s a scam.

You can find more on all the scams mentioned above by visiting the North Dakota Attorney General’s website.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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