DALLAS (CBSDFW.COM) - The explosive popularity of cryptocurrency has fueled a new wave of scams.
In a report released Thursday, the Better Business Bureau found reports of fraud involving cryptocurrency have tripled in the past three years.
According to the consumer group's report, "… scammers are quickly discovering how to use people's lack of knowledge about the system to rip off investors and dress up old scams."
The Federal Trade Commission reported consumers lost $750 million in 2021 to cryptocurrency scams.
"Everything looked perfect" – Elaborate websites can fool even experienced investors
After receiving a message on Facebook about an investment opportunity, Aneela said she was directed to what she was told was a financial investing website.
"It looked just like a bank website," she said. "Everything looked perfectly setup and so I thought that it was a legitimate company."
At first, the Lewisville, Texas woman invested a couple hundred dollars using Bitcoin to deposit the funds as directed.
When the website showed a steady return on her investment, Aneela said she invested more.
However, weeks later when she went to withdraw some of her money, she quickly realized things were not as they appeared.
"My withdrawal was rejected," she said. "I'm like, 'What's happening?' Then nobody answered and they blocked me from the Facebook group."
Shortly thereafter the website was taken down.
Aneela said she lost $16,000 in the online investment scam and, because she used cryptocurrency to deposit funds, investigators told her there was little they could do to track down her money.
"It's perfect for scammers" – Unregulated cryptocurrency difficult to trace
In the past couple years, cryptocurrency has become scammers newest payment of choice and for good reason.
"It's perfect for scammers," said Steve Baker, the Better Business Bureau's international investigator and author of the study on cryptocurrency scams. "Cryptocurrency doesn't go through any bank. It can't be reversed, and you have no idea where in the world it has gone to who it has gone to. And the chances of getting back are almost non-existent."
Unlike with other scams that target older adults, the Better Business Bureau report noted more than half (56%) of all reported victims of cryptocurrency scams are under the age of 45.
"I think the problem is a lot of younger people think, 'Well, this just something my grandparents need to worry about but never would hit me.' Well, it's not true," said Baker.
TIPS TO AVOID CRYPTOCURRENCY SCAMS (from the Better Business Bureau)
- Guard your wallet. If you buy cryptocurrency, the security of the wallet is of prime importance. If you lose the key, then your funds are gone permanently.
- Look carefully at email addresses and website addresses. Phishing scams often try to trick people into logging in and then capture the log in credentials. Those then can be used to steal money. Looking for an exchange with an internet search engine may lead to fake sites which advertise and impersonate real companies. Be especially careful when viewing these on a phone.
- Do not pay for products with cryptocurrency. Be careful if someone asks you to pay with Bitcoin or another cryptocurrency. No one with the government will ever ask for this form of payment.
- Beware of fake recovery companies. Scam companies sometimes claim that they can recover stolen money – for a fee. These are usually scammers.
- Watch out for fake reviews. Scammers often create fake reviews for their own companies.
- Be wary of celebrity endorsements. It can be tempting to rely on a prominent figure who has invested in cryptocurrency. But those endorsements are often not authorized and even if they are, the celebrity may be paid for the effort and may not know more about it than you do.
- Be careful about claims made on social media. This is the most common place for people to encounter investment scams. Be wary of "friends" who reach out to you on social media and tell you how they made money with cryptocurrency. Accounts are frequently compromised. Call your friend by phone to see if it is really them.
- Only download apps from Google Play or the App Store. Trusted app stores do not eliminate the threat of app scams, but they do offer a basic level of protection. Be careful with apps. Some contain malicious software.
- Do not believe promises of guaranteed returns. No one can guarantee how an investment will perform.
The full report can be viewed below.
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