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Crypto scams will increase over the holidays – here’s what you need to know to not fall victim

<p>Each year, as the festive season arrives, we must also keep an eye out for potential scammers trying to ruin the fun. This is because scammers become more active <a href="https://www.scamwatch.gov.au/scam-statistics?scamid=all&amp;date=2021" target="_blank" rel="noopener">during the holidays</a>, targeting us while we have our guard down.</p> <p>So far in 2022, Australians have lost around <a href="https://www.scamwatch.gov.au/scam-statistics?scamid=all&amp;date=2022" target="_blank" rel="noopener">half a billion dollars to scams</a>, which is already significantly more than had been lost by this time last year. The majority of these losses – <a href="https://www.scamwatch.gov.au/scam-statistics?scamid=26&amp;date=2022" target="_blank" rel="noopener">around $300 million</a> – have involved investment or cryptocurrency scams.</p> <figure class="align-center zoomable"><a href="https://images.theconversation.com/files/494108/original/file-20221108-14-vbvqlj.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/494108/original/file-20221108-14-vbvqlj.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px" srcset="https://images.theconversation.com/files/494108/original/file-20221108-14-vbvqlj.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=600&amp;h=370&amp;fit=crop&amp;dpr=1 600w, https://images.theconversation.com/files/494108/original/file-20221108-14-vbvqlj.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=600&amp;h=370&amp;fit=crop&amp;dpr=2 1200w, https://images.theconversation.com/files/494108/original/file-20221108-14-vbvqlj.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=600&amp;h=370&amp;fit=crop&amp;dpr=3 1800w, https://images.theconversation.com/files/494108/original/file-20221108-14-vbvqlj.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;h=465&amp;fit=crop&amp;dpr=1 754w, https://images.theconversation.com/files/494108/original/file-20221108-14-vbvqlj.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=754&amp;h=465&amp;fit=crop&amp;dpr=2 1508w, https://images.theconversation.com/files/494108/original/file-20221108-14-vbvqlj.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=754&amp;h=465&amp;fit=crop&amp;dpr=3 2262w" alt="A chart showing a steady rise of crypto scams, with a spike in April 2022" /></a><figcaption><span class="caption">Investment scams 2019-2022.</span> <span class="attribution"><span class="source">scamwatch.gov.au</span></span></figcaption></figure> <p>Researchers from <a href="https://cybercentre.org.au/" target="_blank" rel="noopener">Deakin University’s Centre for Cyber Security Research and Innovation</a> had a opportunity to interview recent victims of these scams. Here is what we found.</p> <p><strong>Anyone can fall for a scam</strong></p> <blockquote> <p>I was shocked and could not accept that this happened to me although I was very careful […] I was numb for a couple of minutes as it was a large amount of money. – (26-year-old female office manager from South Australia)</p> </blockquote> <p>These scams have become highly sophisticated and criminals have become less discriminating about whom they target. This is reflected in recent victim demographics, showing a wide variety of backgrounds, a more even distribution across several age groups, and an almost even split on gender.</p> <figure class="align-center zoomable"><a href="https://images.theconversation.com/files/494408/original/file-20221109-21-4mauh4.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/494408/original/file-20221109-21-4mauh4.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px" srcset="https://images.theconversation.com/files/494408/original/file-20221109-21-4mauh4.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=600&amp;h=343&amp;fit=crop&amp;dpr=1 600w, https://images.theconversation.com/files/494408/original/file-20221109-21-4mauh4.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=600&amp;h=343&amp;fit=crop&amp;dpr=2 1200w, https://images.theconversation.com/files/494408/original/file-20221109-21-4mauh4.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=600&amp;h=343&amp;fit=crop&amp;dpr=3 1800w, https://images.theconversation.com/files/494408/original/file-20221109-21-4mauh4.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;h=431&amp;fit=crop&amp;dpr=1 754w, https://images.theconversation.com/files/494408/original/file-20221109-21-4mauh4.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=754&amp;h=431&amp;fit=crop&amp;dpr=2 1508w, https://images.theconversation.com/files/494408/original/file-20221109-21-4mauh4.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=754&amp;h=431&amp;fit=crop&amp;dpr=3 2262w" alt="A bar chart showing most age groups are almost equally targeted" /></a><figcaption><span class="caption">Age groups of scam victims.</span> <span class="attribution"><span class="source">scamwatch.gov.au</span></span></figcaption></figure> <figure class="align-center "><img src="https://images.theconversation.com/files/494409/original/file-20221109-24-24ku3v.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px" srcset="https://images.theconversation.com/files/494409/original/file-20221109-24-24ku3v.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=600&amp;h=367&amp;fit=crop&amp;dpr=1 600w, https://images.theconversation.com/files/494409/original/file-20221109-24-24ku3v.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=600&amp;h=367&amp;fit=crop&amp;dpr=2 1200w, https://images.theconversation.com/files/494409/original/file-20221109-24-24ku3v.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=600&amp;h=367&amp;fit=crop&amp;dpr=3 1800w, https://images.theconversation.com/files/494409/original/file-20221109-24-24ku3v.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;h=461&amp;fit=crop&amp;dpr=1 754w, https://images.theconversation.com/files/494409/original/file-20221109-24-24ku3v.png?ixlib=rb-1.1.0&amp;q=30&amp;auto=format&amp;w=754&amp;h=461&amp;fit=crop&amp;dpr=2 1508w, https://images.theconversation.com/files/494409/original/file-20221109-24-24ku3v.png?ixlib=rb-1.1.0&amp;q=15&amp;auto=format&amp;w=754&amp;h=461&amp;fit=crop&amp;dpr=3 2262w" alt="A radial chart showing female scam victims comprise 49%, male 48% and gender X the rest" /><figcaption><span class="caption">Gender distribution for reported scams.</span> <span class="attribution"><span class="source">scamwatch.gov.au</span></span></figcaption></figure> <p>So, how can you spot these scams and where can you get help if you have fallen victim?</p> <p><strong>If it sounds too good to be true, it might just be a scam</strong></p> <blockquote> <p>I was dumbfounded, to say that ground shattered under my feet would be an understatement, it will take me a very long time to recover from it, financially and mentally. – (36-year-old female, legal practitioner from Victoria)</p> </blockquote> <p>Most crypto scams involve getting the victim to buy and send cryptocurrency to the perpetrator’s account for what appears to be a legitimate investment opportunity.</p> <p>Cryptocurrency is the currency of choice for this type of crime, because it’s unregulated, untraceable and transactions cannot be reversed.</p> <p>Victims of such scams are targeted using a number of different methods, which include:</p> <p><strong>Investment scams:</strong> scammers pretend to be investment managers claiming high returns on crypto investments. They get the victim to transfer over funds and escape with them.</p> <p><strong>“Pump and dump”:</strong> scammers usually hype up a new cryptocurrency or an <a href="https://www.kaspersky.com/resource-center/preemptive-safety/how-to-avoid-nft-scams" target="_blank" rel="noopener">NFT project</a> and artificially increase its value. Once enough victims invest, the scammers sell their stake, leaving the victims with worthless cryptocurrency or NFT.</p> <p><strong>Romance scams:</strong> involves scammers using dating platforms, social media or direct messaging to engage with you, gain your trust and pitch an amazing investment opportunity promising high returns, or ask for cryptocurrency to cover medical or travel expenses.</p> <p><strong>Phishing scams:</strong> an old but still effective scam involving malicious emails or messages with links to fake websites promising huge returns on investment or just outright stealing credentials to access users’ digital currency wallets.</p> <p><strong>Ponzi schemes:</strong> a type of investment scam where the scammers use cryptocurrency gathered from multiple victims to repay high interest to some of them; when victims invest more funds, the scammers escape with all the investments.</p> <p><strong>Mining scams:</strong> scammers try and convince victims to buy cryptocurrency to use in mining more of it, while in reality there is no mining happening – the scammers just make transfers that look like returns on the investment. Over time, the victim invests more, and the scammers keep taking it all.</p> <p>Although methods evolve and change, the telltale signs of a potential scam remain relatively similar:</p> <ul> <li>very high returns with promises of little or no risk</li> <li>proprietary or secretive strategies to gain an advantage</li> <li>lack of liquidity, requiring a minimum accumulation amount before funds are released.</li> </ul> <p><strong>Where to seek help if you’ve been scammed</strong></p> <blockquote> <p>I felt helpless, I didn’t know what to do, who to reach out to, I was too embarrassed and just kept blaming myself. – (72-year-old male, accountant from Victoria)</p> </blockquote> <p>If you think you have fallen victim to one of these scams, here is what you need to do next:</p> <ul> <li> <p>inform the Australian Competition and Consumer Commission (ACCC) <a href="https://www.scamwatch.gov.au/report-a-scam" target="_blank" rel="noopener">here</a> or reach out to relevant authorities <a href="https://www.scamwatch.gov.au/get-help/where-to-get-help" target="_blank" rel="noopener">as per advice on the ScamWatch website</a></p> </li> <li> <p>reach out to your friends and family members and inform them of the scam; they can also be a source of help and support during such times</p> </li> <li> <p>as these events can have a psychological impact, it’s recommended you talk to your GP, a health professional, or someone you trust</p> </li> <li> <p>you can also reach out to counselling services such as <a href="http://www.lifeline.org.au/" target="_blank" rel="noopener">LifeLine</a>, <a href="https://www.beyondblue.org.au/" target="_blank" rel="noopener">beyond blue</a>, <a href="http://www.suicidecallbackservice.org.au/" target="_blank" rel="noopener">Sucide Call Back Service</a>, <a href="http://www.mensline.org.au/" target="_blank" rel="noopener">Mens Line</a>, and <a href="https://www.scamwatch.gov.au/get-help/where-to-get-help" target="_blank" rel="noopener">more</a> for help and support.</p> </li> </ul> <p>If you ever find yourself in a difficult situation, please remember help and support is available.</p> <p>Finally, to prevent yourself becoming the next statistic over the holiday period, keep in mind the following advice:<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/194064/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <ul> <li>don’t share your personal details with people online or over a call</li> <li>don’t invest in something you don’t understand</li> <li>if in doubt, talk to an expert or search online for resources yourself (don’t believe any links the scammers send you).</li> </ul> <p><em>Writen by Ashish Nanda, Jeb Webb, Jongkil Jay Jeong, Mohammed Reza Nosouhi, and Syed Wajid Ali Shah. Republished with permission from <a href="https://theconversation.com/crypto-scams-will-increase-over-the-holidays-heres-what-you-need-to-know-to-not-fall-victim-194064" target="_blank" rel="noopener">The Conversation</a>.</em></p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 0px; color: #212529; font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, sans-serif, 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-size: 16px; background-color: #ffffff;"><em style="box-sizing: border-box;">Image: Getty Images</em></p>

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Australians lost $2b to fraud in 2021

<p>Australian consumers and businesses lost more than A$2 billion to scams in 2021, according to the Australian Competition and Consumer Commission’s (ACCC) annual Targeting Scams <a href="https://www.accc.gov.au/publications/targeting-scams-report-on-scam-activity" target="_blank" rel="noopener">report</a> released. This figure should sounds alarm bells – it’s more than double the $851 million reported lost in 2020.</p> <p>The increase in losses was primarily driven by a doubling of investment fraud losses, from $328 million to $701 million, and a substantial increase in payment redirection fraud, from $128 million to $227 million. Scamwatch alone received more than 286,000 reports.</p> <p>So what does the latest report tell us about the current state of play for fraud in Australia? And perhaps more importantly, what can be done?</p> <h2>The rise of crypto scams</h2> <p>Cryptocurrencies have played a major role in fraud losses this year. They’re largely responsible for the surge in investment fraud losses, with many victims being persuaded to invest their funds in fake or non-existent crypto schemes.</p> <p>The request to invest funds in a crypto scheme raises fewer red flags than a request to directly send money to someone. In the former, the victim believes they’re potentially making genuine returns.</p> <p>Cryptocurrencies have become the most popular payment method across all fraud types. This is likely due to the difficulty of tracking crypto payments.</p> <p>Cryptocurrency is also having a significant impact on romance fraud. Romance fraud itself appears steady – with victims reporting $142 million lost in 2021, compared to $131 million in 2020.</p> <p>However, offenders are increasingly using these fake online relationships as a recruitment mechanism for attracting investments in fraudulent crypto schemes. This is known as “<a href="https://www.accc.gov.au/media-release/romance-baiting-scams-on-the-rise" target="_blank" rel="noopener">romance baiting</a>” or “<a href="https://news.sophos.com/en-us/2022/03/16/cryptorom-bitcoin-swindlers-continue-to-target-vulnerable-iphone-and-android-users/" target="_blank" rel="noopener">cryptorom</a>”.</p> <h2>Who are the victims?</h2> <p>Research indicates all demographics are vulnerable to fraud, but not all are equally vulnerable. 2021 saw increased losses for older people, Indigenous Australians, people from culturally and linguistically diverse (CALD) communities and those with a disability.</p> <p>For example, people aged 65 and older reported $82 million lost, up from $38 million the year before. It’s clear the most vulnerable in society are being hugely impacted.</p> <p>Businesses are also being decimated through payment redirection schemes, or “<a href="https://eprints.qut.edu.au/200621/" target="_blank" rel="noopener">business email compromise fraud</a>”. In these cases, offenders infiltrate businesses and intercept payments and invoices from customers and suppliers. This can result in severe financial losses, as seen in the <a href="https://www.abc.net.au/news/science/2022-04-24/scammers-hackers-real-estate-deposit-property-settlement/101000288" target="_blank" rel="noopener">real estate</a> industry.</p> <h2>The ongoing impacts of COVID</h2> <p>The COVID-19 pandemic has been a significant disruptor since March 2020. Lockdowns and isolation requirements have driven a global shift towards online activity. Cybercrime has flourished – and fraud is no exception.</p> <p>The pandemic impacted fraud in several ways. There are COVID-themed frauds targeting Australians, with a focus on <a href="https://www.scamwatch.gov.au/types-of-scams/current-covid-19-coronavirus-scams/covid-19-vaccination-scams" target="_blank" rel="noopener">vaccines</a>, personal protective equipment and <a href="https://www.servicesaustralia.gov.au/text-message-scam-for-free-covid-19-test-kit" target="_blank" rel="noopener">contact tracing</a>. There are also <a href="https://www.choice.com.au/outdoor/pets/products/articles/pet-scams" target="_blank" rel="noopener">pet scams</a> trying to capitalise on people’s desire to purchase furry, four-legged companions.</p> <p>The pandemic also shifted the fraud profile of the Australian population. The continual state of anxiety that has characterised the past two-and-a-half years, coupled with financial and relational strain, has people worn-down.</p> <p>This means fraud approaches that may not have worked prior to the pandemic are now more likely to succeed. And this provides a context to understanding the massive losses in 2021.</p> <h2>What can we expect now?</h2> <p>Despite the magnitude of losses reported, the sad reality is very few of these reports will result in consumers getting their money back. Even fewer will result in a <a href="https://eprints.qut.edu.au/135582/8/ACORN_deidentified_submitted.pdf" target="_blank" rel="noopener">criminal justice outcome</a>. This will leave most victims frustrated and angry with the legal system having not met their expectations.</p> <p>Fraud poses distinct <a href="https://theconversation.com/theres-a-gap-between-what-people-expect-when-they-report-cybercrime-and-what-police-can-deliver-102781" target="_blank" rel="noopener">challenges for police</a> and other agencies. Offenders don’t use their real identities and will often commit offences across multiple jurisdictions, making it difficult to catch and prosecute them.</p> <p>Disruption and prevention are the key to making any inroads in reducing fraud losses. This is challenging work, and arguably more must be done given the recent escalation in losses.</p> <h2>A collective responsibility</h2> <p>It’s important to remember that behind the statistics are individuals who have lost money and, in many cases, suffered considerably. The impact of fraud isn’t restricted to financial loss; it reverberates across the physical, emotional and relational aspects of our lives.</p> <p>Prevention advice for individuals is to remain vigilant, ask questions and do their own research. Having strong passwords and up-to-date software are important, but will do little to deter a motivated offender.</p> <p>Fraud is largely a human problem. So we need to better understand the psychological techniques used by offenders and develop targeted ways to fight back.</p> <p>It’s also time the government took fraud more seriously and invested resources and expertise into reducing losses to individuals, businesses and society at large. Australia currently has no current co-ordinated fraud strategy to mitigate, prevent or respond to losses.</p> <p>There is a clear need to develop better education and prevention materials that account for the diversity in victimisation. Knowing that certain demographics are more likely to be victimised highlights the need to create resources tailored to these individuals.</p> <p>The latest ACCC report should be an unmissable warning sign. On its current path, Australia is headed for even greater losses than the $2 billion mentioned above. At what point will we finally act?</p> <p><em><strong>This article originally appeared on <a href="https://theconversation.com/australians-lost-2b-to-fraud-in-2021-this-figure-should-sound-alarm-bells-for-the-future-186459" target="_blank" rel="noopener">The Conversation</a>. </strong></em></p> <p><em>Image: Shutterstock</em></p>

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