How experts see scam trends shaping up in 2022: Internet Scambusters #1,002
At first sight, you might not think there's a strong connection between romance scams and cybercurrency fraud. But there is, warn consumer experts.
In this week's issue, as part of our ongoing commemoration of more than 1,000 issues of Scambusters, we explain the linkage.
And we show how social media is fanning the flames of these scams.
Let's get started…
Experts Fear Surge in Romance and Cybercurrency Scams
With overall scam losses running at a 10-year high, consumer experts are expressing increasing concern about an alarming rise in cybercurrency and romance scams.
As part of our commemoration of 1,000 issues of Scambusters, we've been sampling the opinions of senior figures in the consumer protection business.
They pinpoint romance scams and cybercurrency fraud as among the most worrying trends, often citing social media as a major cause of the surge.
About a quarter of all fraud losses originate on social media sites like Facebook, TikTok, Twitter, Snapchat, and more.
Research says these sites are more profitable to scammers than any other method of reaching people. No wonder then that the number of scams that started on these sites rocketed by 1,900 percent between 2017 and last year.
The experts also note the shift toward untraceable and irreversible Bitcoin transactions as the fraudsters' favorite method of payment, gradually replacing money-wiring transactions.
Right now, in newly published figures from the National Consumers League (NCL), online shopping remains the top source of Internet scams, accounting for more than a third of online crimes. Bogus prizes, free gifts, and sweepstakes come second, producing about a quarter of all complaints.
Sweetheart swindles and currency scams are to blame in a relatively small percentage, but the number of incidents and the average losses are rapidly rising. And the two crimes are said to be the most profitable for social media scammers.
According to NCL's anti-scam site, Fraud.org, losses from investment scams (including crypto) average around $1,750 per victim, second only to fake checks, which cost victims an average $2,000 a time.
Growing awareness of cryptocurrency -- non-physical, digital money that is recorded and moved using computer-generated encryption -- is to blame for the rise in this crime. Conversely, its precisely because people don't know enough about it that it's popular with crooks.
It's why, says NCL's vice president, John Breyault, "you see an influx of people who maybe aren't savvy investors, but think there's a quick buck to be made, and scammers are taking advantage of that."
Another lure is the use of celebrity names -- most recently Prince Harry and Megan Markle -- to fake support for phony currency schemes.
Meanwhile, data from the US Federal Trade Commission (FTC) shows that losses from romance scams have hit a record. In 2021, victims reported losses totaling $547 million. That's almost $1.5 million a day, or a thousand dollars every minute!
Sadly, the crime is currently growing at an annual rate of almost 50 percent. And two weeks ago, five federal agencies announced they were joining forces to warn the public about the ongoing dangers of romance scams. They've launched a campaign called "Dating or Defrauding?"
According to Deborah Royster, assistant director of the Office for Older Americans at the Consumer Financial Protection Bureau, seniors are among those most at risk of losing large sums.
Losses average around $9,500 in older age groups. On the other hand, people in the 19 to 39 age category are twice as likely to be targeted by the scammers.
A worrying aspect of the current scam scene highlighted by other experts is that these two crimes -- dating scams and cybercurrency fraud -- are being combined into a nasty piece of trickery.
"A growing trend in 2021 was scammers using romance as a hook to lure people into bogus investments, especially cryptocurrency," says the FTC's Emma Fletcher.
"People are led to believe their new online companion is a successful investor who, before long, casually offers investment advice. These so-called investment opportunities often involve foreign exchange (forex) trading or cryptocurrency.
"And when people follow this investment 'advice' they wind up losing all the money they 'invest'."
Another ongoing concern among consumer groups is the scam impact of the pandemic.
Samuel Levine, Director of the FTC's Bureau of Consumer Protection, says: "During the course of this pandemic, we have encountered disturbing trends and surging complaints as Americans are being targeted by predators large and small, with schemes including get-rich-quick opportunities, bogus cures, false promises of economic assistance, and counterfeit personal protective equipment (PPE)."
And Dan Rutherford, Associate Director of Customer Outreach at the Commodity Futures Trading Commission (CFTC), told financial magazine Kiplinger that there appears to be a correlation between the pandemic, an increase in speculative trading, and scams that exploit it.
The CFTC, which is one of the partners of the "Dating or Defrauding?" campaign, echoes concerns about the linkage between romance and cybercurrency and other investment scams.
"The CFTC has received complaints about frauds that originated on dating apps and social media platforms," the organization says in an alert.
"In many cases, the victims believed they were in romantic relationships that had formed over several weeks. These frauds are often conducted by people and entities outside the United States and use unregistered trading websites or third-party trading software."
Kiplinger adds that the scammers pose as business executives, cozying up to their victims but claiming they can't meet or even do a video call. Their aim is to lure their "dates" into areas of investment about which they know little.
"Sometimes the appeal isn't just personal attraction, but the prospect of getting in on a trend where others seem to be making lots of money," the publication adds.
Bearing in mind that we're in the early days of cybercurrency and that there will always be lonely hearts in our society, it's a strong bet that we'll be hearing a lot more about these scams and the role of social media and the pandemic in furthering them.
To learn more, stay tuned to Scambusters, as we stay tuned to what the experts say.
Time to conclude for today -- have a great week!