According to a US Federal Trade Commission report, nearly half of the consumers who reported losing 1 billion USD in cryptocurrencies to scams since 2021 said it started with an advertisement, post, or message on a social media network like Instagram or Facebook.
Since the beginning of 2021, more than 46k people have reported losing more than 1 billion USD in cryptocurrency to scammers, accounting for roughly one out of every four dollars lost, says FTC in its analysis. The losses reported in 2021 were over 60 times more than those reported in 2018.
Bitcoin (70%), Tether (10%), and Ether (9%) were the main cryptocurrencies lost to scammers. According to the FTC, bitcoin accounted for nearly four out of every ten dollars lost to social media fraud since the start of 2021, significantly more than any other payment method.
Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (7%) were the main platforms identified in these reports.
Different Strategies Used by Scammers
Most of the recorded crypto fraud losses on social media were investment schemes. Since 2021, false investment opportunities have accounted for 575 million USD of all crypto fraud losses submitted to the FTC, significantly more than any other fraud.
With 185 million USD in recorded crypto losses since 2021 – nearly one out of every three dollars reported lost – romance scams came in second.
Counterfeit business and government scams came in third, with a total of 133 million USD. Scammers target consumers, stating their capital is at risk due to fraud or a government inquiry.
People between the age group of 20 to 49 were more than three times as likely to have disclosed losing cryptocurrencies to a scammer as those in older age groups. Individuals in their 30s were the hardest hit, with cryptocurrencies accounting for 35% of their reported fraud losses since 2021.
The median individual reported loss, on the other hand, tended to rise with age, peaking at 11,708 USD for those in their 70s.
A Word of Caution by FTC
The FTC outlined several strategies to avoid falling victim to cryptocurrency fraud. According to the warning indications, only scammers will guarantee riches or large returns.
No cryptocurrency investment, much alone a large one, can ever be guaranteed to make money. Nobody who is legitimate will ask you to buy cryptocurrency to solve an issue or protect your funds. That is a ruse, noted FTC in its report.
Scammers are drawn to crypto for a variety of reasons, which may explain why reported losses in 2021 were approximately sixty times higher than in 2018.
There is no centralized entity, such as a bank, to flag questionable transactions and tries to stop fraud before it occurs. Crypto transfers are irreversible; once the money is gone, it’s gone forever. And the majority of people are still unaware of how cryptography works. These factors are not unique to cryptocurrency transactions, but they all play into scammers’ hands.
Also, never combine online dating with financial advice. It is a scam if a new love interest wants to teach you how to invest in cryptocurrency or asks you to transfer cryptocurrency, says FTC.