An official explained how “there are at least a couple of things in play” that are contributing to the highs.
The popularity and value of virtual currencies like Bitcoin and Ethereum have soared in recent months—and nearly simultaneously, reports of cryptocurrency investment scams flooded into the FTC at record levels.
“We often look for trends in our complaint data so we can warn consumers about scams and fraud they should be on outlook for,” an FTC spokesperson told Nextgov Tuesday. “The big jump in reports from consumers about cryptocurrency investment scams really stood out to us.”
Cryptocurrencies make up a suite of monies exchanged online and secured by cryptography. Some retail giants more recently started accepting payments in the form of these currencies, and though they’re largely considered unstable, their prices have also reached new highs in the last year.
“Some say there’s a Wild West vibe to the crypto culture, and an element of mystery too,” an FTC official wrote in the new report, adding that those and other features play “right into the hands of scammers.”
While the millions in losses mentioned only account for people who submitted information to the commission, they represent a more than tenfold year-over-year increase. The figures used by the federal entity are rooted in reports that flow into it via a cyber tool specifically for that purpose.
“This is self-reported data from consumers either submitted directly to the FTC or from Consumer Sentinel contributors,” the spokesperson said.
This analysis encompasses roughly 7,000 reports of crypto investment scams logged by the agency since last fall—with a median loss of $1,900. The data showed that 20- to 49-year-olds were five times more likely to repost losing money to these sorts of fakes than older age groups.
And 14% of reported losses to imposters of all types are now in cryptocurrency, it demonstrates.
“We can’t say for sure why it’s happening now but there are at least a couple of things in play. First, cryptocurrency is hot right now—people hear stories about people making lots of money on bitcoin and other products. People don’t want to miss out, and get-rich-quick schemes are as old as society,” the spokesperson said. “Second, cryptocurrency is relatively new, and scammers can prey on people’s lack of knowledge about how cryptocurrency investments work.”
Those steering the scamming are pursuing creative paths to do so, too. The FTC highlighted a variety of those in its report.
For example, “people have reported sending more than $2 million in cryptocurrency to Elon Musk impersonators over just the past six months,” the commission’s report noted, and online dating has also been used to attract others. Many have also “told the FTC they loaded cash into Bitcoin ATM machines to pay imposters claiming to be from the Social Security Administration,” the report said.
In both the report and a separate post, the commission offered some recommendations for those planning to grow their internet-based currency investment portfolios.
“If a caller, love interest, organization, or anyone else insists on cryptocurrency, you can bet it’s a scam,” the FTC spokesperson said, reiterating one of the suggestions.