Better Business Bureau says scams involving cryptocurrency are now the second riskiest behind employment scams
FRESNO – As the internet continues to play a larger role in the economy, scammers continue to make online currency a bigger part of their repertoire.
The Better Business Bureau (BBB) of Central California announced earlier this month that scams involving cryptocurrency, an internet-based form of money, were identified as the second “riskiest scam” category last year, just two years after the BBB added them on its Scam Tracker radar.
Although employment scams remained the riskiest for the second year in a row, the surprise of the BBB’s latest report, New Risks and Emerging Technologies: 2019 BBB Scam Tracker Risk Report (BBB.org/RiskReport), was cryptocurrency leaping into the No. 2 spot, with a median dollar loss of $3,000. The report is based on data supplied by consumers to BBB Scam TrackerSM (BBB.org/ScamTracker) and uses the BBB Risk Index, a unique algorithm that calculates exposure, susceptibility, and monetary loss to offer a more accurate assessment of scam risk.
“Scammers take advantage of newer technologies and changes in the marketplace,” said Melissa Lanning Trumpower, executive director of the BBB Institute for Marketplace Trust, which produced the report. “Cryptocurrency scams rose to the number two riskiest scam in 2019 as scammers took advantage of consumers looking to capitalize on these emerging digital assets. Unfortunately, hype and heightened emotion can sometimes prevent consumers from doing their due diligence to investigate offers and exchange sites before making a purchase.”
Cryptocurrency scams occur when the virtual coins are purchased from, traded by, or stored with a person or exchange site that turns out to be fraudulent. Sometimes these digital assets are purchased as part of a fraudulent Initial Coin Offering (ICO), in which investors are scammed into paying money or trading digital assets for a company or product that never materializes.
According to the Risk Report, 68.5% of people that reported a cryptocurrency scam lost money, and nearly one-third of these losses (31.0%) involved the cryptocurrency exchange site C2CX. Additionally, 23.4% of individuals said they purchased cryptocurrency as an investment opportunity.
Unlike money stored in a traditional bank account, which is insured against theft, digital assets such as cryptocurrency cannot be retrieved, and transactions cannot be reversed in the case of theft or cyber hacking.
“Scammers are opportunists,” said Trumpower. “Whatever is in the news or being talked about on social media, they see as an opening. Scammers will also imposter a recognizable and respected organization or brand.”
The ten riskiest scams of 2019 were: employment, cryptocurrency, online purchase, fake checks/money orders, advance fee loan, romance, home improvement, investment, tech support, and travel/vacation/timeshare.