Cryptocurrency Scams: Australian Competition & Consumer Commission Reports Sees Increase at End of 2017

The Australian Competition & Consumer Commission (ACCC) has published their 9th annual report on scam activity in Australia.  As one may expect, investment scams posted the highest amount of loss in 2017 with reports to “Scamwatch” and ACORN exceeding $64.6 million (Dating and romance scams’ were next highest in losses with over $42 million). Across all categories for individuals that shared their age, the more senior victims reported the highest amount of loss. In aggregate, the scam report said all categories reported exceeded $340 million in losses to consumers and businesses.

ACCC reports that the use of cryptocurrencies and scams leveraging the popularity of investments in cryptocurrencies peaked in the last quarter of 2017. Overall, approximately $2.1 million in crypto based losses were reported to Scamwatch in 2017.

As the popularity of initial coin offerings increased, fraud associated with crypto rose. Between January and September 2017, about $100 000 was reported lost per month to crypto scams. In the month of December 2017, reported losses to Scamwatch exceeded $700 000 and the average reported loss had jumped from $1885 in January to $13 205.

ACCC says that as the value of actual cryptocurrencies increased, so too did the scam losses in what people thought were real investments. While the reported total exceeded $2.1 million ACCC believes “this is likely the very tip of the iceberg.”

Examples cited of cryptocurrency scams in 2017 include fake initial coin offerings.

Others capitalized on the confusion as to how cryptocurrency works. Some people found themselves caught up scams that were said to be essentially pyramid schemes.

Some reports showed that victims entered into cryptocurrency-based scams through friends and family who convinced them they were onto a good thing. Another scam was requesting payment through cryptocurrencies because it is easier to remain anonymous while receiving payment.

Ransomware scammers were said to commonly ask for payment through Bitcoin.

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