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Cryptocurrency fraud is now the riskiest scam for consumers, according to BBB
Cryptocurrency and other investment scams are now the riskiest type of scam in the United States, with crypto fraudsters frequently cheating victims out of thousands of dollars, the Better Business Bureau said.
Fraudsters have found creative ways to defraud investors, the BBB said in its annual report. report on the biggest scams of 2023, which is based on 67,000 scam reports.
About 80% of Americans targeted by crypto and investment scams last year lost money, the BBB reported. The median amount lost was $3,800, “but many people lose much more than that” in crypto scams, said Anna Werner, CBS News national consumer investigative correspondent.
Hackers use social media, video gaming platforms, or text messages to contact people and brag about their financial performance through crypto investment. After the targeted victim responds, the conversation quickly turns into a question, Werner explained.
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“This is where scammers pressure you to buy, trade or store digital assets – such as cryptocurrencies – on fraudulent exchanges,” Werner said.
Cryptocurrency is an unregulated investment space that federal regulators and consumer advocates say makes it ripe for fraud. Crypto’s popularity exploded during the pandemic as some investors became curious about the craze and invested funds in Bitcoin, Ethereum, Solana and other tokens. Today, the industry has a market capitalization of $2.65 trillion, according to Forbes.
Although crypto has proven lucrative for many investors, it is not without risks. Businesses that were once considered legitimate then imploded, like FTX, once one of the largest crypto exchanges in the world. FTX collapsed in 2022 amid an $8 billion fund shortfall and allegations that former CEO Sam Bankman-Fried took customer money to prop up a struggling hedge fund.
Crypto investors have also reported losing billions of dollars due to hacks or scams. A 70-year-old California woman filed a lawsuit this year against Chase Bank after lost $720,000 to fraudster in crypto scam.
Rounding out the list of top financial risks in 2023, the BBB named employment scams the second riskiest scam. This is when a scammer contacts a victim and convinces the person that they have been hired at a company and need to complete employee information.
In reality, the scammer is stealing someone’s personal information. Victims lost an average of $1,995 in employment scams last year, the BBB said.
Online shopping scams were the third riskiest, according to BBB. Victims usually log on to a fake website to purchase an item, but a scammer does not deliver the product. The BBB said victims lost an average of $71 in these types of scams last year.