Introduction
"Social media and cryptocurrencies are a combustible combination for fraud, with almost half the people who reported losing $1 billion in digital currencies to scams since 2021 saying it started with an advertisement, post, or message on a platform like Instagram or Facebook..." [Merchant, M. Social media and crypto a combustible combination for fraud: FTC report. (Accessed June 6, 2022)].
Published last Friday (June 3, 2022), a United States Federal Trade Commission report found that this loss "was more than a five-fold increase from 2020, and nearly sixty times up from 2018" [Ng, F. Social media blamed for $1B in crypto scam losses in 2021. (Accessed June 6, 2022)].
Given the magnitude of this problem, let's give a closer look at the available statistics as well as possible strategies to be used to protect one from falling victim to scams.
Social Media Crypto Scam Statistics
Of the people who reported being scammed out of crypto since 2021, those who specified which social media site was involved provided the following breakdown: "32% said it was on Instagram, 26% said Facebook, 9% said WhatsApp, and 7% said Telegram" [Fair, L. Reported crypto scam losses since 2021 top $1 billion, says FTC Data Spotlight. (Accessed June 6, 2022).
Interestingly, Twitter, the social media platform widely adopted by the crypto-community, was not mentioned despite being littered with spam and scam bots touting fake crypto giveaways.
[Ng. Supra.]
Measured by amount of cryptocurrency lost, the top frauds perpetrated is led by investment related frauds, which included bogus investment opportunities and confidence schemes. Next on this list is romance scams [see, e.g. Nagoda, K. Lonely Hearts in Silicon Valley Falling Prey to 'Pig Slaughter' Scams. (Accessed June 6, 2022)] followed by 'business imposter' scams [see, e.g. Miranda, C. New crypto payment scam alert. (Accessed June 6, 2022)] and 'government imposter' scams [see, e.g. Federal Trade Commission. How To Avoid a Government Impersonator Scam. (Accessed June 6, 2022).
The FTC report is also instructive on the age demographics concerning social media cryptocurrency scams:
According to the Data Spotlight, the 20-49 age group was more than three time more likely than older consumers to report losing cryptocurrency to a scammer. 30-somethings appear to be the hardest hit with 35% of their reported fraud losses since 2021 sent in crypto. But when it comes to individual losses, median reported losses for people in their 70s have been the highest at $11,708. This is consistent with trends we’ve seen from previous Data Spotlights: Older consumers may report a lower rate of fraud, but when they report financial loss, the dollar amounts are often higher.
[Fair. Supra].
FTC Suggestions for Protection from Social Media Crypto Scams
...Even people who consider themselves tech-savvy can lose money to crypto crooks. Here are three things to bear in mind to protect yourself:
- Only scammers will guarantee profits or big returns.
- No one legitimate will insist that you buy cryptocurrency.
- If an online love asks you to send crypto – or claims they can show you how to make money investing in crypto – pull the plug on your virtual romance.
[Id].
If you would like further information concerning cryptocurrency scams click ftc.gov/cryptocurrency. And if you believe you were the subject of any deceptive practice concerning cryptocurrency, notify the FTC by clicking ReportFraud.ftc.gov..
Final Thoughts
Certain features of cryptocurrency may explain why it’s a pet payment method for crooks and cons. There’s no bank or other entity to flag suspicious transactions before they happen. Crypto transfers can’t be reversed. Once the money’s gone, you can kiss your crypto buh-bye. And most people are still unfamiliar with how crypto works. Those considerations aren’t unique to crypto, but they do offer insights into why it’s become a fraudster favorite.
[Id].
However, you can easily safeguard your hard earned cryptocurrency. Merely exercise excessive common sense when dealing with crypto on the internet, remain diligent, and most importantly, always remain excessively cautious in all your personal finance activities. It's not always easy to do, but nonetheless it is essential for your own protection. Just be careful!