According to the Federal Trade Commission (FTC), consumers who fell victim to fraud involving cryptocurrencies lost a record $1 billion from January 2021 through March 2022. The agency’s latest Consumer Protection Data Spotlight reported that cryptocurrency investment schemes, then romance scams, and thirdly business and government impersonation scams were the top three ploys used to deceive consumers.
The report explained that bogus crypto investment schemes tallied by far the most losses at $575 million. Typically, these schemes lure potential victims by advertising huge returns on investment, yet consumers reported losing all the money they “invested,” the FTC said. Similarly, romance schemes involve “a love interest who tries to entice someone into investing in what turns out to be a cryptocurrency scam,” the accompanying press release said.
In addition, the report honed in on scam origin, explaining that nearly half of consumers first saw scams on a social media platform advertisements, posts, or messages. In terms of victim age, the FTC found that the 20 to 49 age demographic was three times more likely to succumb to a crypto scam than older age groups. The report tempered this fact by noting that individual median reported losses clocked in at a high of $11,708 for people in their 70s.
The FTC emphasized that cryptocurrency is “quickly becoming the payment of choice for many scammers, with about one out of every four dollars reported lost to fraud paid in cryptocurrency.” To this end, the agency explained that several crypto features play into scammers’ hands, including no bank or centralized authority to flag suspicious activity, transfers’ irreversibility, and the fact that most people are still unfamiliar with crypto’s intimate workings.
