However, with this growing popularity comes an increase in scams and fraudsters looking to take advantage of unsuspecting investors.
The latest stats from Lloyds Banking Group reveal that crypto scams increased by 23% last year, with victims losing an average of £10,741 and two-thirds of investment scams originating on social media.1
This article aims to offer valuable insights to help safeguard your employees and yourself from cryptocurrency investment scams and payment diversion fraud. By staying informed and cautious, you can protect your finances and avoid falling prey to these deceptive practices.
Cryptocurrency investments
As the cryptocurrency market continues to evolve, scammers are becoming increasingly sophisticated in their tactics. Protecting yourself from scam cryptocurrency investments requires vigilance, research, and scepticism. Always thoroughly investigate and verify the credibility of an investment, and never invest more than you can afford to lose.
Fraudsters are using new and inventive ways to tempt people to invest in bogus funds, including:
- Fake online and social media adverts promising high returns on investments, sometimes featuring false celebrity endorsements which can appear authentic
- Fraudsters may initiate contact out of the blue via messaging applications like WhatsApp or Facebook Messenger. Using an unusual explanation, like asking if you are "Pete the Plumber" they draw you into a conversation and come across as wanting to develop a genuine friendship or romantic relationship
- Once they engage you in conversation, they dangle riches supposedly made through trading cryptocurrency and encourage you to purchase or transfer assets using a specific trading platform, which is likely to be fake and controlled by the scammer or their associates
Payment diversion fraud
In today's digital age, payment diversion fraud has become a prevalent threat to individuals and businesses alike. Scammers constantly devise new tactics to trick unsuspecting customers into redirecting their payments to fraudulent accounts. As brokers, it is our responsibility to raise awareness and help you take necessary precautions to protect yourself against this type of fraud.
The following red flags could alert you to payment diversion fraud:
- Being asked to urgently process a payment that is large or unusual
- Being asked to change the bank details of an existing supplier; for example, someone impersonating Gallagher could contact you asking you to change the details
- The language used in the email is inconsistent with that of the genuine sender
- The body of the email or email address contains spelling mistakes
Conclusion
Don't trust that unexpected text or direct message from a stranger-it might be the first step in an investment scam. "Pig Butchering" scams, so named in reference to the practice of fattening a pig before slaughter, often involve fraudsters contacting targets seemingly at random, then gaining trust before ultimately manipulating their targets into phoney investments and disappearing with the funds.
If you would like to know more details on these risks, please refer to the following FCA campaigns: Invest Smart to help warn people about the risks of investing online and Scam Smart to warn those who are most at risk of investment fraud and pension scams.
Ultimately, if you have any doubt about the transaction, then do not transfer the money.
