Crypto fraud has rocketed in the last year as criminals target people struggling during the economic downturn.
Despite the cryptocurrency market crash, which has seen the overall market cap drop from more than $3 trillion to less than $900 billion today, fraudsters are more likely than ever to steal virtual currencies.
New data from cybersecurity company NordVPN reveals an increase of 58% in the past 12 months, with victims in the UK generally losing £36,250 per malicious act.
Dan Holmes, head of fraud SME at Feedzai, says “during an economic downturn, we tend to see an increase in customers falling for scams like this”.
He added: “Although the crypto industry is seeking change, in recent times, crypto popularity has been predominantly fuelled by the potential to make fast, sizeable gains from the volatility of markets.
“Struggling consumers tend to become more emotionally and financially vulnerable, and the lure of making high returns from investments like crypto creates a heightened susceptibility to scams which fraudsters prey on.
“It is this consumer desire to make money quickly, combined with the fear of missing out on growth opportunities that fraudsters are now savvily using to their advantage. The intricacies of crypto scams can vary wildly, but ultimately the macro level convincer is always the same – the promise of something for free.”
Feedzai is a data science company which develops machine learning technology to manage financial risk for the world’s largest banks, merchants and processors.
“Consumers can follow some simple guidance to avoid becoming victims of these scams,” said Holmes.
“Ignore any advert that creates a ‘too good to be true’ proposal like guaranteed huge returns on investments and free coins as a sign-up bonus. Thoroughly check out any crypto advert that uses a celebrity endorsement, as it is likely fake.”
Although banks in the UK will consider refunding scam victims under the Contingent Reimbursement Model (CRM), there is no regulatory guarantee that a victim will get their money back.
The latest UKF paper, for example, showed that in 2021 only 51% of consumers who fall victim to scams are reimbursed by the banks.
“This should be the biggest trigger for a consumer and should always prompt a final check before executing a payment,” explained Holmes.
“It’s worth knowing that banks will do all they can to block transactions where they suspect a customer is being scammed – the technology that enables this is extremely sophisticated and passive to the consumer, so they don’t know it is happening.
“However, despite best efforts it will never be possible to stop them all, but do heed extra warnings from banks in the form of ‘in-the-moment’ education and awareness and overt warnings.
“If in any doubt whatsoever about a call you have received or a payment you are making, call your bank and seek immediate advice.”