With crypto scams on the rise, here’s what you need to do to protect yourself

Every year, as the festive season arrives, we also have to watch out for would-be scammers trying to ruin the fun. This is because scammers are becoming more active during the holidaysfocused on us while we are on our guard.

So far in 2022, Australians have lost approx half a billion dollars in scams, which is already considerably more than was lost at this time last year. The majority of these losses – about $300 million – have been involved in investment or cryptocurrency scams.

Investment scam 2019-2022.
scamwatch.gov.au

Researchers of Deakin University’s Center for Cybersecurity Research and Innovation had the opportunity to interview recent victims of this scam. This is what we found.

Anyone can fall for a scam

I was shocked and could not accept that this happened to me, although I was very careful […] I was numb for a few minutes because it was a large amount of money. – (26 year old female office manager from South Australia)

These scams have become very sophisticated and criminals are less discerning about who they target. This is reflected in recent victim demographics, which show a wide variety of backgrounds, a more even distribution across different age groups, and an almost equal distribution by gender.

A bar chart showing that most age groups are almost equally targeted
Age groups of scam victims.
scamwatch.gov.au
A radial chart of female scam victims includes 49%, male 48% and gender X the rest
Gender distribution for reported scams.
scamwatch.gov.au

So, how can you spot these scams and where can you get help if you’ve been a victim?

If it sounds too good to be true, it could just be a scam

I was stunned, to say the ground shattered under my feet would be an understatement, it will take a very long time to recover from it financially and mentally. – (36-year-old woman, lawyer from Victoria)

Most crypto scams involve the victim purchasing cryptocurrency and sending it to the perpetrator’s account for what appears to be a legitimate investment opportunity.

Cryptocurrency is the currency of choice for this type of crime because it is unregulated, untraceable and transactions cannot be reversed.

Victims of such scams are targeted in various ways, including:

Investment scam: scammers pose as investment managers claiming high returns on crypto investments. They get the victim to transfer money and escape with them.

“Pump and Dump”: scammers usually hype a new cryptocurrency or a NFT project and artificially inflate the value. Once enough victims invest, the scammers sell their stakes, leaving the victims with worthless cryptocurrency or NFT.

Romance Scams: includes scammers using dating platforms, social media or direct messages to connect with you, gain your trust and pitch a great investment opportunity that promises high returns, or solicit cryptocurrency to cover medical or travel expenses.

Phishing: an old but still effective scam involving malicious emails or messages with links to bogus websites promising huge returns on investment or simply outright stealing credentials to access users’ digital currency wallets.

Ponzi schemes: a type of investment scam where the scammers use cryptocurrency collected from multiple victims to pay back high interest to some of them; when victims invest more money, the scammers escape with all the investments.

Mining scam: Scammers try to convince victims to buy cryptocurrency in order to use more of it, when in reality no mining takes place – the scammers only make transfers that resemble return on investment. Over time, the victim invests more and the scammers keep taking everything.

While methods evolve and change, the telltale signs of a possible scam remain relatively the same:

  • very high returns with promises of little or no risk
  • proprietary or secret strategies to gain advantage
  • lack of liquidity, requiring a minimum amount of accumulation before funds are released.

Where to get help if you’ve been scammed

I felt helpless, I didn’t know what to do, who to contact, I was too embarrassed and kept blaming myself. – (72-year-old male, accountant from Victoria)

If you think you have fallen victim to one of these scams, here’s what you should do:

  • inform the Australian Competition and Consumer Commission (ACCC) here or contact the relevant authorities according to advice on the ScamWatch website
  • contact your friends and relatives and let them know about the scam; they can also be a source of help and support at such times
  • as these events can have a psychological impact, it is advisable to talk to your GP, a health professional or someone you trust
  • you can also contact advisory services such as Lifeline, beyond blue, Suci call back service, Men’s Lineand Lake for help and support.

If you ever find yourself in a difficult situation, remember that help and support is available.

Finally, to avoid becoming the next statistic during the holiday season, keep the following advice in mind:The conversation

  • do not share your personal information with people online or during a conversation
  • don’t invest in something you don’t understand
  • When in doubt, talk to an expert or look online for resources yourself (don’t believe any links the scammers send you).

Ashish NandaCyberCRC Research Fellow, Center for Cybersecurity Research and Innovation (CSRI), University of Deakin; Jeff WebbSenior Research Fellow, Center for Cybersecurity Research and Innovation (CSRI), University of Deakin; Jongkil Jay JeongCyberCRC Senior Research Fellow, Center for Cybersecurity Research and Innovation (CSRI), University of Deakin; Mohammad Reza NosouhiCyberCRC Research Fellow, Center for Cybersecurity Research and Innovation (CSRI), Deakin University, University of Deakinand Syed Wajid Ali ShahCSCRC Research Fellow, Center for Cybersecurity Research and Innovation, University of Deakin

This article has been republished from The conversation under a Creative Commons license. Read the original article.

Shreya has been with australiabusinessblog.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider australiabusinessblog.com, Shreya seeks to understand an audience before creating memorable, persuasive copy.