/ Money, Technology

Cryptocurrency scams – what can you do to stop them?


Due to the dramatic rise of public interest in cryptocurrencies, rogue organisations are capitalising on the opportunity to scam people out of their hard-earned money. Our guest, John Mitchison from the DMA, tells you how to spot a cryptocurrency scam and what you can do to help stop their rise…

Action Fraud, the UK’s national fraud and cybercrime reporting centre, claims that crimes linked to Bitcoin increased to 999 in 2017, compared to just 320 in the previous year.

Cryptocurrency scams are becoming more prevalent and will continue to rise unless victims take action. So what can you do to help hold the tide and what’s out there to assist you?

What is a typical cryptocurrency scam?

The majority of reported cases usually involve callers posing as financial advisors with the promise of astronomical returns on investments.

Other reported frauds are harder to detect, involving fraudsters claiming to be from reputable utility companies that can reduce monthly bills in return for an annual payment.

This payment is usually taken by credit card over the phone. The details are then used to purchase cryptocurrency (via online exchanges, such as Coinify) and transfer the cryptocurrency purchased to another wallet.

This makes it extremely difficult, and in some cases impossible, for the funds to be recovered.

So how can you help protect yourself and stop the rise of cryptocurrency scams in the process?

Don’t inadvertently assist scammers

Personal information continues to be given out readily by customers and this can all too often find its way into the wrong hands. Always question what information each organisation requests from you and if it is absolutely necessary for them to have it.

Despite the lack of current regulation on cryptocurrencies, registered businesses aiming to comply with any future rules are using Anti Money Laundering (AML) and Know Your Customer (KYC) checks regardless.

These are the standard checks associated with setting up any financial account. You will be asked to provide a proof of address (within three months of date) and a recognised form of identification before they are able to accept any type of investment from the individual. If an organisation isn’t trying to protect their interests and be thorough, they are likely trying to scam you.

There are no guarantees in any investments. Something you can do is investigate every company you send money to and ensure they are being compliant with industry-standard AML and KYC procedures. If they try to rush you into an investment, they are likely not interested in protecting your assets.

Who can help?

The TPS is a central opt-out register to which consumers can sign up, free of charge, to record a preference not to receive unsolicited sales or marketing calls. It is a legal requirement for telemarketers not to call a TPS-subscribed number after 28 days, but users should start noticing a gradual decline from registration.

These days, nuisance calls and scams are becoming more of an issue on mobile phones, but there are apps out there that can help.

One such app is TPS Protect, which is designed to help block, identify and report incoming untrustworthy calls. It also allows users to register with the TPS and file complaints.

Signing up to TPS won’t stop scam calls, but it will make them easier for you to spot.

Can we really stop scams?

It is essential to the empowerment of services, such as the TPS, that people not only register but complain about every nuisance call and potential scam they receive.

The more people who do so, the greater number of organisations that will be held accountable to the laws in place to protect consumers.

Complaints to the TPS are passed onto the relevant body, such as Action Fraud or the Information Commissioner’s Office. It’s only with complaint information that these bodies can investigate and potentially fine companies or even prosecute those that are breaking the rules.

This is a guest post by John Mitchison. All views expressed here are John’s own and not necessarily those also shared by Which?

Have you or someone you know been affected by a cryptocurrency scam? What happened? What measures have you taken to protect yourself?

Have you invested in bitcoin or other cryptocurrencies?

No – far too risky (91%, 1,058 Votes)

No – and I regret it (5%, 64 Votes)

Yes – and I'd recommend it (2%, 29 Votes)

Yes – but I regret it (1%, 16 Votes)

Total Voters: 1,167

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This comment was removed at the request of the user

Anyone who goes near crypto currencies or the organisations who deal in such things have only themselves to blame if they lose the lot. This is high level gambling with high risk stakes, an uncertain market and more crooks than James Bond movie.

As ever, one should beware of “geeks bearing gifts”.

Scam investments usually rely on (a) the potential investor knowing nothing about the nature of the investment and (b) fabulous promises of high investment returns.

Who here understands cryptocurrencies? Perhaps if someone does they might explain them. To me they are based on nothing, but build like pyramids. If you don’t understand something, then don’t go for it. And if the returns seem out of all proportion to those in the normal financial market then so is the risk. If you realise this then by all means gamble your money away.

This comment was removed at the request of the user

Should surely be illegal? May even be…

I’m not keen on gambling so I will leave cryptocurrencies to others. If anyone tries to get me interested I will assume that it is a scam.

This comment was removed at the request of the user

It’s no secret that bitcoin mining uses a lot of energy:

It’s been suggested that there is not enough generating capacity to charge electric cars but if we put an end to bitcoin mining, that would help.