Consumers wasted billions of dollars to fraud artists on social media last year who offered guaranteed profits on investments.
A crypto-mining scam that started with a WhatsApp message from a stunning stranger defrauded Troy Gochenour, 50, of Columbus, Ohio, out of $25,800, including $15,800 in borrowed funds.
After failing to break into the entertainment industry in New York, he had just returned home to start over, and he was lonely, Gochenour recalled. He therefore began internet dating. Then he received a WhatsApp message that started with the words “Sorry to bother you.”
According to the Federal Trade Commission, customers lost $3.8 billion to financial frauds, including cryptocurrency schemes, in the United States alone last year, which is a twofold increase from 2021. Scams of this nature are an issue everywhere.
Those that work in the field, including the FTC and Better Business Bureau, claim that the rise of online payment platforms and applications, the propagation of financial misinformation, and the speed and convenience of the internet have all contributed to the increase. They also bring up the isolation and loneliness of the epidemic era.
In Gochenour’s case, she brought up liquidity mining after several weeks of messaging with someone who seemed romantically interested in him.
Even if he had initially opposed crypto, he ultimately started to heed her suggestions and directives. Scammers like Gochenour’s have gotten good at creating websites that superficially resemble authentic cryptocurrency businesses, and Gochenour was duped. It appeared like the money he transferred there after setting up a cryptocurrency wallet was growing exactly as his con artist had predicted it would.
He claimed, he got hooked on this person. And initially, it appeared to be working. “We could work together and earn all of this money”, she added.
He claimed, he got hooked on this person. And initially, it appeared to be working. “We could work together and earn all of this money”, she added.
Then, after adding around $5,000 of his own money to the wallet, he woke up one morning to check the balance and discovered that the money was gone. He visited a website that his con artist had recommended in an effort to figure out what had transpired, and there he discovered a contract. He spoke with the con artist about it, and she advised him to get in touch with “customer service,” who informed him he needed to contribute an additional $10,000 to get all of his money back plus bonuses.
Even though money was constantly being transferred out of Gochenour’s wallet, he kept adding cash until it appeared that he would soon have $200,000 available.
He said that all of the numbers were fictitious and altered.
Gochenour realized it was a scam when he was informed he had to pay $35,000 in taxes upfront to receive the $200,000 in funds. In addition to his $55,000 in student loan debt at that point, he had also taken out nearly $16,000 in personal loans after being seduced by promises of even higher profits. He now collaborates with the Global Anti-Scam Organization to look into similar scams and to spread awareness.
Think about the following to avoid getting conned: WHAT TYPES OF COMMON INVESTMENT SCAM RED FLAGS ARE THERE?
Most will sound quick, simple, and risk-free. Many involve gold, cryptocurrencies, real estate, or financial coaching. The business frequently employs guarantees and terms like “proven” along with testimonies from those who claim to be on the other side and have greatly profited. According to Melanie McGovern, head of public relations for the International Association of Better Business Bureaus, these are typically paid actors and made-up reviews.
McGovern advised to be wary of those endorsements. Furthermore, be familiar with your friends. Reach out to a person on a different platform if you receive a message from an account that appears dubious, especially if it comes from someone you haven’t heard from in a while. Considering that these might be spoofs. (Spoofing is the term for when a hacker poses as a reliable source.)
Additionally, offers frequently include a deadline: “Make a tone of money quickly!” “One-of-a-kind offer, expires tomorrow!” Or complex procedures requiring additional financial investments at each stage, like the liquidity mining con, Gochenour encountered. Typically, the con artist presents a picture of your future life once you become wealthy. Nobody, however, is able to guarantee a profit, and those who claim their investments are risk-free are frauds.
What signals indicate an investment fraud?
Do some research on the offer first. Slow down; con artists try to rush you. Do a web search for the business name and terms like “review,” “scam,” or “complaint.”
Second, consult a friend or expert before acting on the information. Even though you might not have received an offer like this, there is a good possibility that you know someone who has, especially since fraudsters frequently target particular groups of people, according to the FTC.
Third, refuse any unauthorized offers. If you receive a call, text, or email offering “an amazing investment opportunity” out of the blue, it’s a fraud.
Finally, turn down the appealing proposal.
Before spending any money, legitimate businesses allow you to take the time you need to do your research, according to McGovern.
Scammers will frequently overestimate the relevance of current events, using headlines as a springboard for their offer. They hope that by making an opportunity appear new, inventive, and relevant, a target will commit without having thoroughly investigated the offer.
The FTC suggests you hit “deleted,” “hang up,” and “exit.” specifically if they ask you to withdraw funds from your 401(k) to invest.
How does a crypto investment fraud work?
The FTC advises that one tell-tale indication of a cryptocurrency fraud is when the scammer requests money in advance for whatever reason. The scammer will frequently claim that this advance payment is to acquire something necessary for a large return or to protect the money you’ve already invested in some way. Gochenour was exposed to various variations of this send-money-to-get-more-money strategy.
The agency advises against combining online dating and investment advice. It’s a fraud if you meet someone on a dating site or app who wants to show you how to invest in cryptocurrency or ask you to transfer them cryptocurrency.
According to McGovern, the actual extent of losses is higher than what has been disclosed because many people are ashamed of falling for these scams and wish to keep the results a secret from their loved ones. However, she urges consumers to file complaints with the BBB, CFPB, FTC, and Internet Crime Complaint Centre about the scams.
What types of investment frauds are most prevalent?
Investment guidance
The con artist will claim under this scheme that their “patented,” “tested,” or “proven” method will enable you to profit from investments in stocks, bonds, foreign currencies, or tax liens. They assert that the strategy will enable you to stop working and put you up for life. You will need to pay costs up front for the remaining expensive coaching, with no assurance of a return, following the free events and introductory films.
According to the FTC’s consumer advisory, everything is part of an advertising scheme to convince you to shell out thousands of dollars for what ultimately proves to be hollow promises.
Real estate coaching
Online and in-person real estate investing seminars frequently advertise “risk-free” education while attracting targets with assurances of financial security. Watch out for exaggerated claims in marketing materials and sales pitches. Keep an eye out for cliches like “sure thing,” “security for years to come,” or the promise of “raking in money by working part-time or at home.” The vast majority of customers never recoup their thousands of dollars in upfront costs.
Precious metals and coins
Watch careful if “metal dealers” or “rare coin merchants” advise you to invest right away. In this con, the scammers often just retain your money. Before making an investment in bullion, bullion coins, collector coins, or gold, the Federal Trade Commission urges investors to read the Commodity Futures Trading Commission’s precious metals scam warning.
