Investors saw some remarkable gains from cryptocurrency in 2021, and so did fraudsters, a new report says.
The median amount of money that fraud victims lost to scams such as bogus prizes, fake checks and shady investment opportunities — many with a link to cryptocurrency — climbed to $800 in 2021, according to the National Consumers League.
That was a $150 increase from the previous year, according to the consumer advocacy organization, which runs Fraud.org. It’s been a decade since losses were in that vicinity. In 2012, the median loss amount was $787, according to the organization.
Fraud.org staffers fielded more than 4,300 complaints last year. Though the share of complaints with a specified financial loss decreased year over year, the size of the losses that victims suffered increased.
It’s a sign that con artists are improving their skills separating victims from even more of their money, said John Breyault, the National Consumers League’s vice president of public policy, telecommunications, and fraud.
“We remain concerned that consumers facing economic difficulty and isolation from friends and loved ones due the pandemic are creating fertile ground for crooks,” said Breyault, who is also the director of the Fraud.org campaign.
“‘We remain concerned that consumers facing economic difficulty and isolation from friends and loved ones due the pandemic are creating fertile ground for crooks.’”
Investment scams with a tie to cryptocurrency are especially ripe for rip-offs, the organization said.
In the category of scams related to dubious investment opportunities — from purported real estate deals to rare coins — there was a 168% year-over-year increase in complaints from people who fell victim to phony investments that often had a crypto angle. In 2021, this category was the fastest-growing type of fraud complaint, the organization said.
The general pattern was an enticement to sink money into a new type of cryptocurrency supposedly bound for massive returns, according to Breyault. Often, victims were pointed to a slick, but fake, exchange where they deposited their money, never to be seen again when the victim later attempted a withdrawal or switch to another cryptocurrency.
Wider media coverage and public awareness about cryptocurrency is one reason “why 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,” Breyault said.
Furthermore, cryptocurrency payments can be anonymous, instant and irreversible, Breyault added — “a perfect payment method if you are a scammer.”
Overall, investment scams were typically costlier than others, with victims incurring a $1,750 median loss. That’s second behind the median $2,000 losses in phony check crimes, where someone was paid with a false check.
The most common scams were the promise of fake prizes and non-existent lottery winnings in exchange for real money. Victims of those had a $795 median loss.
The National Consumers League findings come on the heels of other findings digging into consumer scams — particularly those online. Social media is teeming with consumer fraud dangers, the Federal Trade Commission recently said.
More than one quarter of the nearly 350,000 fraud reports to the FTC’s Consumer Sentinel Network that indicated a dollar loss also said the con originated online. These people lost a combined $770 million in sharp year-over-year climbs.
In the National Consumers League report, more than one-third of the scams started with online contact, while roughly 45% began with a phone call.
It’s important for consumer fraud victims to report what happened to organizations like Fraud.org, agencies like the FTC or law enforcement authorities like a state attorney general’s office, Breyault emphasized.
Consumer fraud is historically an under-reported crime due to stigmas where victims may feel embarrassed, ashamed or scared to tell family and others, Breyault noted. Reporting the fraud may lead to a break in a person’s case, and also help authorities build bigger cases against con artists. “You can definitely help other people,” Breyault said.