Lloyds Bank Warns Consumers About Growing Threat of Crypto Scams

A growing number of British investors risk being defrauded by a wave of fake adverts posted on social media, according to a new a warning issued by Lloyds Bank.

The number of cryptocurrency investment scams reported1 “by victims so far this year has risen by 23%, compared to the same period in 2022.”

The average amount lost by each victim of “a crypto investment scam is £10,741 (up from £7,010 last year).” This is more than “any other type of consumer fraud (such as romance scams or purchase scams).”

Remarkably, the analysis found “that 66% of all investment scams start on social media – with Instagram and Facebook the most common sources.” This includes a mix “of bogus ads, fake celebrity endorsements, and targeting through direct messages.”

The scourge of crypto scams

The organized criminal gangs “behind scams are constantly evolving their tactics to exploit new trends and trick more victims into parting with their cash.”

Over recent years they’ve widened their net “to target younger investors, who are often tempted by the supposed ‘get rich quick’ promise of cryptocurrency trading.”

The most common age range “for crypto scam victims is 25 to 34 year olds, who make up a quarter of all cases.”

Would-be crypto investors typically make “an average of three payments before they realise they have been scammed, taking around 100 days from the date of the first transaction before they report it to their bank. By this point, the money is usually long gone, and impossible for the bank to reclaim.”

Revolut is the most common recipient of Faster Payments “made by crypto investment scam victims at Lloyds Banking Group (though is not always the end destination of the funds, which may then be sent on elsewhere).”

The warning signs of a crypto scam

While even genuine investment in cryptocurrencies is highly risky – with the FCA stating people should be “prepared to lose all their money2 – ultimately that is an individual choice for each investor.”

But it’s important to remember that fraudsters “will go to great lengths to convince investors that they are the real deal.”

This can include setting up fake companies, social media profiles and websites “to clone real firms.”

They may even produce investment literature that “looks professional.”

There are two main ways “that fraudsters snare the cash of would-be investors through crypto scams:”

The illusion

This is where there is “no genuine investment platform or cryptocurrency involved.”

The fraudster, typically posing “as an ‘investment manager’, promises that any payments made by the victim will be invested on their behalf, often with the promise of huge returns.”

Sometimes the victim will be “shown a fake investment account, suggesting that the funds are already making a profit, or a small amount of money will be transferred back into their bank account.”

However, both tricks are just “a way of duping the victim into thinking the investment is real and encouraging them to part with even more money.”

There is no investment account, “no genuine crypto holding, and once the fraudster has taken as much money as they can, they will simply disappear.”

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