Scammers are using cryptocurrency in new ways

typing on computer
Scammers are more active now than ever, with the Federal Trade Commission (FTC) reporting that Americans lost almost $8.8 billion to scams in 2022. 

That’s up 30% over 2021 losses. And while the number of reports of scams decreased last year – to 2.4 million from 2.9 million in 2021 – individual victims report that the amount of money lost in each scam actually increased. In 2022, the median loss was $650, up from $500 in 2021.

A fast-growing category of scams involves cryptocurrency or digital currency. Given the unregulated nature of cryptocurrency, there is risk when buying and selling cryptocurrency, with many documented cases of people being swindled.

But now the FTC reports that cryptocurrency has also become the preferred method for scammers to collect money from all kinds of scams, replacing gift cards and other means. Since the start of 2021, more than 46,000 people have reported losing over $1 billion in cryptocurrency scams.

In a case recently in Connecticut, an 84-year-old man lost his life savings to a scammer involving cryptocurrency. It’s an unusual case, but it shows the lengths scammers will go to get your money.

The man received a phone call from a stranger claiming that he had accidentally deposited $20,000 into the man’s checking account. The man was skeptical at first, but when he checked the balance in his checking account he found that there was $22,000 – $20,000 more than he expected. He called the person back who had contacted him to find out how to return the $20,000. The man was told the best way would be for him to withdraw the money from his bank and return it by depositing it into an ATM following their instructions.

The man went ahead and withdrew the money from his bank and, following the instructions, he went to an ATM in a convenience store and put in 200 $100 bills. Later that day, he started getting suspicious, so he called his son and told him what happened. The son immediately suspected a scam and contacted the local police. As part of the police investigation, they visited the convenience store and had the ATM opened. Inside they found the man’s $20,000, confirming his story. But they were not able to return the money to him because it had been converted to cryptocurrency, and there was no trail of where it went or any way to get it back.

Further investigation revealed that the scam likely started over a month earlier when the man was having trouble with his computer. He reached out to an online help service, and in the process, he gave them his login credentials. The scammer later used this access to transfer $20,000 from the man’s savings account to his checking account to begin the ruse.

In this case, there were a lot of red flags, but scammers know how to manipulate their victims so that sometimes the signs are missed.

A good tip to help avoid becoming a victim is stay alert to the fact that scams exist. When dealing with all with uninvited contacts from people or businesses – whether it’s over the phone, by mail, email, in person or on a social networking site--always consider the possibility that the approach may be a scam.

© 2023 M.A. CO.