Earlier in 2021, the Washington Post reported that cryptocurrency scams were skyrocketing – rising 1,000% on the figures from 2020 and costing consumers at least $80 million. With such big gains to be made, scammers are constantly trying to think up new, creative ways to trick people into handing over their virtual currency. The rise of such criminal behaviour has led to Google, Facebook, Twitter, and Instagram banning cryptocurrency advertisements on their websites in some countries to try and protect their users.
What do these scams look like?
It may seem fairly obvious, but cryptocurrency scams focus on getting holders of digital currencies to hand over their coins to a person or company. In this sense, it’s different to a banking scam as it specifically targets those people holding electronic money assets, such as Bitcoin, Dogecoin, and Ethereum. As these cryptocurrencies are not regulated by
any financial authorities, it can be almost impossible to get your money back if you become a victim of a scam.
Here are some red flags to watch out for that many indicate a potential
- Celebrity endorsement: In the US, cryptocurrency scammers pretending to be Tesla boss, Elon Musk, made more than $2m (£1.4m) in six months, US consumer-protection officials said in May. Such scams often begin as investment tips on online message boards, with the goal to lure people onto fake investment websites. In some cases, the celebrity will claim to be giving away crypto-cash to their fans – asking people to send them a small amount of crypto-
currency to qualify for the giveaway.
- Top tip: Make sure any celebrity account that looks to be indulging in this kind of activity has a verified ‘blue badge’ next to their name to show they are the real account holder. Many celebrities and CEOs of cryptocurrencies have also publicly announced they will never participate in such schemes, you can verify this with a quick Google search next time you see a claim online.
- Guaranteed returns and free money: Offers that seem too good to be true often are, and yet, it’s surprising how often people will pay money to a website if they are ‘guaranteed to double their money’. With this scam, victims will often again be directed to a website that appears to be legitimate and will put pressure on them to make payments, for instance by using a countdown timer. Given the huge fluctuations in the price of cryptocurrencies, compared to money invested by banks, the idea of ‘getting rich quick’ is more likely to have an impact here and scammers know this.
- Top tip: If there isn’t a small lock icon indicating security near the URL bar and no “https” in the site address, think twice before inputting any of your details or making a purchase. This is because the transfer won’t be using encryption to secure any details you submit. It is also important to use this technique when buying from social media sites that direct you to a shop’s
website and payment portal.
- Big claims without details or explanations: Think about all the terms and conditions that come with transactions from your bank. If there’s a competition or deal for cryptocurrency, or if you’re being asked to set up a crypto wallet, you’d expect this to be the same. If you can’t find the details for the terms online the likelihood is the website and company aren’t legitimate.
- Top tip: Check for obvious misspellings in the copy or even the name of the app/website the post directs to (unless it’s via an email link as this can put malware on your device). Verify the branding, logo and colouring to make sure it looks authentic and visit the other pages on the website. Is there a contact form? Where is the company registered? Do they have a telephone
number and email address listed? Without this extra information, you have no proof the website existed should it suddenly disappear.
- Unsolicited contact: One of the most common ways that NatWest bank in the UK says cryptocurrency scams affect their customers is through an unexpected email or phone call asking the intended victim to set up a cryptocurrency wallet. If you’ve never expressed interest in cryptocurrency before, don’t let someone (most commonly a ‘trader’) try and convince you invest your money over the phone or by email, as these are most often scams.
- If you are contacted in this manner, you may also want to watch out for any attempt to get hold of your personal details. Your bank and other financial institutions will NEVER ask you for account numbers, passwords, or personal information so a phone call or email requiring this data to proceed with a transaction is suspicious and could be a phishing attempt.
- Top tip: Make sure any cryptocurrency seller you want to use is registered with the Financial Conduct Authority. This public entity also has a searchable list of unauthorised firms and individuals offering financial services – any firm on this list is NOT legitimate and should be avoided.
If you see any of these red flags when looking at cryptocurrency investment opportunities, we advise that you do not go through with the transaction – it is always better to be safe than sorry. If you have any questions or other technology queries comment below or tweet @techtroublesho1.