According to the Federal Trade Commission (FTC) over 46,000 people have reported losing over $1 billion in crypto scams since 2021. Bitcoin, Tether, and Ether were the main cryptocurrencies used to pay scammers in such schemes.
Per the reports, one out of every four dollars was lost to fraud, with people losing over $1 billion, the most of any payment method.
The FTC is a watchdog for consumer protection and unfair business practices. It released a report that looked into how such scams are increasingly more frequent and how they are carried out.
It cited one of the initial causes as “social media and crypto as a combustible combo for fraud” through ads or postings on social media platforms.
Nearly four out of every ten dollars is spent on social media sites such as Instagram, Facebook, WhatsApp, and Telegram, which is considerably greater than any other payment method.
The FTC also noted that the most common scam was “bogus cryptocurrency investment opportunities,” which cost consumers $575 million since 2021.
Scammers promise big returns, but then use crypto smoke and mirrors to take advantage of people’s inexperience.
Romance scammers, who construct fake profiles on dating sites and apps, come in second, with $185 million in recorded bitcoin losses since 2021, accounting for over a third of all losses. An individual’s average reported loss is a whopping $10,000.
Also read: Binance Requests to be Removed From a Crypto Romance Scam
Payment transfers are final and cannot be reversed, which is a key feature of cryptocurrencies such as bitcoin. This is not always a positive thing.
The FTC report describes other common methods used by con artists to convince people to send cryptos, such as business and government impersonation scams.
These scams can begin with a text about an allegedly unauthorized Amazon purchase or an alarming online pop-up disguised as a Microsoft security alert. Scammers may even call a “bank” to confirm the story, but it’s really just a partner in crime, resulting in $133 million in losses since 2021.
The 20-49 age group was over three times more likely to report losing cryptocurrency to a scammer than older consumers. People in their 30s reported 35% of fraud losses since 2021. Individual losses, however, have been highest for people in their 70s, with an average reported loss of $11,708.
