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Cryptocurrency fraudsters take advantage of our online habits

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With £146m lost to scammers in 2021 as a result of cryptocurrency fraud, would be investors need to carry out proper research.

Data from the National Fraud and Cyber Crime Reporting Centre, Action Fraud shows that £146m was lost to cryptocurrency fraud in 2021, with the majority of victims being from the 18-45 age group. Cryptocurrency is often seen as an investment opportunity with quick returns but is not without risk.

Cryptocurrency fraud usually happens through Authorised Push Payments (APP), where the investor transfers money into an account they believe to be genuine, often after seeing an online advert for a great investment opportunity. Not realising the advert was placed by a scammer, the investor realises too late that they have been conned and their money has gone.

This has renewed pressure on search engine providers and social media platforms to do more about clamping down on fake adverts posted by scammers. Currently, most scams are reported by individuals and financial services firms themselves, meaning that many adverts still get through to our news feeds on popular social media platforms like Facebook and Instagram.

It isn’t surprising that fraudsters target would-be investors online, as recent data from the lifeboat Financial Services Compensation Scheme (FSCS) and Government backed City watchdog, the Financial Conduct Authority (FCS) revealed, almost half of UK investors do not research their investments because it is “time-consuming”, or “too complicated”.

The FSCS and FCA have expressed concerns that consumers could face potential risks, including investment scams, given their lack of knowledge and diligent research. There are many online platforms which give you easier access to investments, but this is no substitute for getting proper financial advice. Some investments are unregulated by the FCA and there are different levels of risk involved.

The FSCS/FCA research also revealed that 27% of adults would be more likely to invest in a time-limited opportunity, such as one that is available “for 24 hours only”. This is a tactic often used by scammers, tapping into our innate ‘fear of missing out’ or FOMO.

The advice given by the FCA is to take time to research the investment and to check that the investment firm isn’t on their warning list, for operating without authorisation, for example.

Alarmingly, the same survey found that nearly a quarter of respondents had not checked or did not know if their investment was FSCS protected. The Financial Services Compensation Scheme is a government-backed service designed to step in and pay compensation when financial firms fail, but it should be noted that most crypto assets are not regulated by the FCA, meaning that investors could not access the FSCS, should the companies offering such investments go out of business.

A further concern in the financial services industry is the use, by genuine financial services providers, of influencers. These are people paid to endorse products on social media and more widely online. This is a popular way to promote goods and services, as an endorsement from a celebrity or individual can be more persuasive than scrolling past a bland ‘promoted post’.

The FCA are urging people not to be persuaded to invest their money just because their friends are investing, or because an investment is promoted by a particular celebrity or social media influencer.

If you think you have been scammed, get in touch with your bank and the police as soon as possible. You can also report any suspected scamming activity to Action Fraud.

If you have lost money due to fraud, then the police may carry out a criminal investigation. If a criminal prosecution is successful, the court can order compensation. But this is not always possible, particularly if the fraudster is overseas or has no assets with which to pay any compensation.

In addition to criminal proceedings, you may have the basis of a complaint and claim against your bank if you feel that they did not do enough to protect your account. TLW Solicitors has a specialist APP fraud team with years of experience in successfully dealing with complaints to FOS. We understand the claims process, the information that needs to be gathered and the time limits that apply.

Our Head of Professional Negligence, Sarah Spruce, said:

“Online cyber-scammers use many different techniques to manipulate their victims into handing over money in ‘get rich quick’ schemes. It is extremely important that anyone thinking of making any such investment carries out sufficient due diligence and as a starting point check whether they are regulated. There is plenty of information and specialist help available to avoid being the next victim of the fraudsters.”

If you, a friend or a loved one has been conned into making payments to investment fraudsters, then please get in touch with our specialist team for a confidential, no-obligation discussion. We work on a no win no fee basis, so you pay us nothing if your fraud claim is unsuccessful.

You can call us on 0800 169 5925, complete the callback enquiry form or email info@tlwsolicitors.co.uk

Time limits can apply and so anyone wishing to bring a claim should do so without delay.

Meet Our Team

Meet Sarah, who heads up our experienced Authorised Push Payment Fraud Claims team.

Sarah and her colleagues are on hand to help with your claim.

The FSCS and FCA have expressed concerns that consumers could face potential risks, including investment scams, given their lack of knowledge and diligent research.

FT Advisor