Cybercurrency and gold coin scams rocket during lockdowns: Internet Scambusters #945
There are coins you can see, like gold, and those you can't see, like Bitcoin and other cybercurrencies -- but they are all the target of coin scammers.
Fraudsters are pulling in a fortune, especially from older folk, exploiting gullibility and lack of knowledge of these complex markets.
In this week's issue, we'll explain the latest coin frauds and the simple steps you can take to make sure you don't get caught out.
Let's get started...
Seniors Targeted in Latest Gold and Bitcoin Scams
Two different types of coins -- gold and the cybercurrency Bitcoin -- are being used to target vulnerable investors, mainly seniors, during these times of economic uncertainty.
They're being tricked into handing over millions of dollars for over-priced bullion coins or lured into the prospect of mouthwatering profits amid the turbulent pricing of Bitcoin.
We've previously reported on some of these scams but the past few months of record-low interest rates and rollercoaster equity markets in a challenging economy have seen a big rise in speculative investment fraud.
Gold is used as a safe haven. With lockdowns and other restrictions hitting the economy hard, experts say they expect gold prices, recently trading around $1,900 an ounce, to rise steadily during 2021.
On the other hand, cyber currencies like Bitcoin are soaring and plunging, sometimes overnight, creating big losses for some and huge profits for others. Recently, Bitcoin prices have rocketed to record levels, leaping thousands of dollars in just a few weeks, before falling back again.
Some analysts say the price could reach mouthwatering levels in six figures within the next year or two.
At the same time, many investors in these markets don't know a lot about them. Both gold and Bitcoin are complex markets, calling for considerable knowledge to avoid big-time losses.
In other words, everything is ripe for scamming. The scene is set for crooks to up their game.
How Gold Coin Scams Net Millions
One of the most common scams involves the selling of metal that isn't what it's supposed to be, either not gold at all or of a lower quality, or karat value.
This is often in the form of jewelry. Scams range from parking lot tricksters who offer fake gold, usually brass, to passers-by, often with a stooge who seemingly happens to walk past and "confirms" its value, to dubious traders passing off 14 karat gold as 22 or 24 karat.
However, these tricks usually involve relatively small individual sums. There are a lot of them, but each usually tricking a few hundred dollars or less out of victims.
On the other hand, during the past few months, one scam alone is alleged to have tricked buyers into handing over a total of $185 million for wildly over-priced bullion coins. Sometimes, prices were as much as four times what they should have been.
Florida attorney general Ashley Moody was quoted recently as saying: "I am sickened by the way these fraudsters preyed on vulnerable investors' fears of market instability and economic uncertainty."
People who fall for the scam -- lured by social media and TV or radio ads -- are often repeatedly pestered by the crooks to buy more, at increasingly inflated prices. Sometimes, according to the seniors' organization AARP, victims have been drawing heavily on their life savings to make the purchases.
The US Commodity Futures Trading Commission (CFTC) says the best way to avoid gold fraud is to:
- Be wary of salespeople who can't prove they're licensed to trade and pressure you into buying right now, often by offering a supposed "instant discount."
- Online and broadcast ads that "guarantee" price rises or claim you can't lose.
- Do your research, checking the seller out with the CFTC and other regulatory agencies.
You should also never yield to pressure to "buy now" and, as with all investments, seek advice from a financial professional.
Famous Names Used in Bitcoin Scams
Recently, we've been hearing a lot about so-called influencers -- people, especially celebrities, who are paid to recommend certain products online.
It's bad enough when they don't declare this when they're promoting products. But it's even worse when they don't recommend a product at all but scammers pretend they do.
That's what's happening with Bitcoin and other cybercurrencies.
Russian scammers are running a global racket using names and images of well-known celebrities, sports stars, and financial experts. For instance, recent ads have used the name of tennis star Boris Becker, actor Chris Hemsworth, and international consumer finance expert Martin Lewis.
Furthermore, many ads based on these scams are turning up at the top of browser searches.
Media site TheGuardian.com reported last month that victims who click on these ads are lured in by having to pay a relatively small amount, like $250, to get into the market. But, again, they're pestered to commit larger and larger sums, sometimes to the point of committing their entire life savings.
In other instances, victims' names are sold to other scammers because they're identified as gullible.
TheGuardian.com quotes Google as saying it removed 5,000 bad ads per minute in 2019 - but "scammers are constantly evolving their efforts, while we evolve our policies and enforcement to address this."
British newspaper site Mirror.co.uk reports on a Bitcoin-based scam involving the previously mentioned Martin Lewis saying: "Anyone who does not jump on this opportunity is missing out" and "I would say that it could transform anyone into a millionaire within 3-4 months."
Lewis said nothing of the sort, of course. Nor did other famous names like Bill Gates and Elon Musk who were said by the scammers to be consultants to their program.
The thing about Bitcoin and other cybercurrencies is that they are hugely complicated and require a high level of expertise for investment trading. Novices who buy them might just as well be at the racetrack betting on horses.
While it seems perfectly reasonable to buy a small amount without knowing much, to pay for purchases from organizations who accept Bitcoin payments (and often offer a discount for doing so), it's crazy to enter the market as an investor without consulting an expert.
Plus, of course, as we frequently report, Bitcoin transactions are untraceable, which means they're favored by crooks as well as legitimate firms.
If you see a Bitcoin promo using a well-known name, be on your guard. It's almost certainly a scam.
If you want to learn more about cybercurrency scams, check out our recent issue at Cryptocurrency Scammers Trade on Investor Ignorance.
Alert of the week
If you have a concealed weapon carry permit, beware of texts and email messages saying your permit needs to be changed or updated.
Scammers are using this tactic both to gain information about gun owners or to fleece them out of money for the supposed amendments.
Don't click on links in any of these messages. If in doubt, check with your local Sheriff's office.