Lloyds Bank warns of a 23% rise in crypto scams, mostly initiated via social media, targeting younger investors.
In a recent alert, Lloyds Bank disclosed a worrying surge in crypto scams, with an increase of 23% compared to last year. These scams, primarily targeting younger investors, have become increasingly sophisticated and prevalent. On average, victims are losing £10,741, a staggering amount that surpasses losses in other types of consumer fraud. The bank’s analysis reveals that social media platforms, notably Instagram and Facebook, are hotbeds for these scams, with two-thirds of investment scams originating there.
The allure of quick profits from cryptocurrency investments has particularly attracted younger investors, with the 25 to 34 age group being the most affected. Typically, victims make about three payments before realizing they’ve been scammed. By the time these scams are reported to the bank, usually around 100 days after the first transaction, the funds are often irretrievable. Revolut, a popular payment platform, is frequently used in these transactions, although the funds often move elsewhere subsequently.
How Scammers Operate
Scammers use two primary strategies to deceive their victims. The first involves creating an illusion of a genuine investment platform or cryptocurrency. Here, victims are shown fake investment accounts and are sometimes paid small amounts to give the illusion of profit, encouraging further investment. However, these are mere tactics to swindle more money before the fraudster vanishes.
The second method involves actual investment accounts set up on legitimate platforms, like Coinbase or Binance. Victims are often tricked into handing over control of their digital wallets or transferring cryptocurrency to the scammer’s wallet.
It’s crucial to note that cryptocurrency payments are not just limited to investment scams but are also used in romance and impersonation scams. Any request for cryptocurrency payments should immediately raise red flags. Liz Ziegler, Lloyds Bank’s Fraud Prevention Director, emphasizes the need for investing through trusted, genuine companies. She points out the high risk and largely unregulated nature of the crypto market, which makes it ripe for exploitation by fraudsters.
Staying Safe from Crypto Scams
To safeguard against these scams, vigilance on social media is crucial. Scammers often use social media ads and direct messages to entice victims with unrealistic returns. Confirming the legitimacy of the company and checking for warnings on the FCA website can help identify genuine firms. Since marketing of crypto is now regulated, genuine crypto ads should include warnings about the risk of losing money.
Crypto users must keep personal information – like investment account login details or private cryptocurrency keys – confidential. If the name on the account you pay does not match the company name, it’s likely a scam. Finally, paying by card offers more protection than bank transfers, which are difficult to reverse in case of fraud.