Crypto Scams Soar Despite Crash

“Although the crypto industry is seeking change – in recent times, crypto popularity has been predominantly fuelled by the potential to make fast, sizeable gains from the volatility of markets. It is this consumer desire to make money quickly, combined with the fear of missing out on growth opportunities that fraudsters are now savvily using to their advantage. The intricacies of crypto scams can vary wildly, but ultimately the macro level convincer is always the same – the promise of something for free. Consumers can follow some simple guidance to avoid becoming victims of these scams, including ignoring any advert that creates a ‘too good to be true’ proposal like guaranteed huge returns on investments and free coins as a sign up bonus. In addition, thoroughly checking out any crypto advert that uses a celebrity endorsement, as it is likely fake. There has been some progress on this front with ‘The Martin Lewis bill’ (driven by personal finance guru Martin Lewis to prevent tech giants publishing celebrity based adds without explicit consent) making its way into the Online Safety Bill.

“Furthermore, although banks in the UK will consider refunding scam victims under the Contingent Reimbursement Model (CRM), there is no regulatory guarantee that a victim will get their money back. The latest UKF paper for example showed that in 2021 only 51% of consumers who fall victim to scams are reimbursed by the banks. This should be the biggest trigger for a consumer and should always prompt a final check before executing a payment.

“It’s worth knowing that banks will do all they can to block transactions where they suspect a customer is being scammed – the technology that enables this is extremely sophisticated and passive to the consumer, so they don’t know it is happening. However, despite best efforts it will never be possible to stop them all, but do heed extra warnings from banks in the form of “in-the-moment” education and awareness and overt warnings. If in any doubt whatsoever about a call you have received or a payment you are making, call your bank and seek immediate advice. Finally, the consumer also has a responsibility to keep their assets safe – this isn’t purely down to the bank. On this basis, consumers should be encouraged to regularly educate themselves on the latest scam trends. This can be done via a number of sources, but a solid / credible choice is the Take-Five campaign managed by UK Finance.

“One final thing to consider is also the fact that during economic downturn we tend to see an increase in customers falling for scams like this. Struggling consumers tend to become more emotionally and financially vulnerable, and the lure of making high returns from investments like crypto creates a heightened susceptibility to scams which fraudsters prey on.”