Pensioner loses over £110,000 in cryptocurrency scam – and they’re still chasing!

Sarah Evans (surname changed for privacy), decided to invest in cryptocurrency after seeing an Instagram advert that took her to a website where she bought Bitcoin to the value of £200. She was subsequently contacted by ‘advisers’ who claimed that they could coach her on cryptocurrency investment, and even told her that her initial £200 of Bitcoin was now worth over £8,000.

However, as with all investment scams, it would not be as easy as simply investing the money and seeing the returns come in, first Sarah was told that she would need to pass the investment firm’s ‘money laundering checks’ by transferring £2,000 to a digital program used to process cryptocurrency transactions, known as a crypto wallet.

Following the ‘adviser’s’ encouragement and guidance, Ms Evans was convinced to send further, increasingly substantial, amounts of money to the crypto wallet in order to get the money she had already invested back. On one occasion she transferred £20,000 in one day, the maximum sum authorised by her RBS bank account that she had held for over 60 years.

Once the scam had been uncovered, Ms Evans believed that her bank should have done more to halt or entirely block the suspicious payments, but RBS has refused to reimburse her for the funds lost. Interestingly, a short time after the scam, RBS did stop a legitimate incoming payment of £2,000, claiming that the amount looked suspicious and suspended her account for 10 days.

Since being scammed, Ms Evans has continued to be contacted up to six times a day by fraudsters claiming to be able to help her recoup her losses and even calling the accusations of fraud untrue.

The firm with which Ms Evans was dealing was operating under the name ‘AreaTrading’, and has been labelled by financial services watchdog, the Financial Conduct Authority (FCA), as a clone firm. Clone firms use the contact information and other details of legitimate, FCA-approved investment firms to convince unsuspecting investors that their company is regulated and safe to interact with.

Ms Evans did not see the FCA warning on AreaTrading until after losing her money and, as the scam was very complicated and used various pieces of online finance software and systems such as Revolut, Binance, Wise and Exodus, she never wittingly sent any money direct to AreaTrading.

The initial payments made by Ms Evans into the crypto wallet from her RBS bank account are an example of authorised push payment (APP) fraud. This is where scammers use various manipulation tactics to convince a victim to willingly transfer money out of their bank account and into the hands of the fraudsters.

Once the funds have been moved to the scammer’s account or one to which they have access, they are usually moved straight on making it very difficult to get a refund of the money.

If you, a loved one or someone you know has been affected by an APP scam, the first thing to do is report it to Action Fraud, the police, and your bank. Depending on the circumstances of the scam, banks may provide a refund of part or all of the lost funds.

In the UK, banks have a responsibility to have safeguards and procedures in place to keep their consumers safe from scams and fraud such as investment fraud; even Ms Evans’ own bank did flag up a small payment as suspicious, but this came after the substantial cryptocurrency loss.

However, the Financial Ombudsman Service (FOS), an independent Government-backed body responsible for settling disputes between financial institutions and their customers, is increasingly finding that banks have failed to have sufficient safeguards in place to protect customers from fraud.

Victims of scams who believe that their bank has not done enough to prevent or stop the scam can take their complaints to the FOS for an independent investigation.

If you are considering investing in cryptocurrency, it is vital that you understand how to spot a legitimate scheme and avoid falling victim to scammers.

Some actions you can take before parting with any money include:

• Avoiding anyone who contacts you about investments out of the blue such as via social media, email, phone, or messaging apps.
• Double check the legitimacy of any adverts you see online by cross referencing the company’s details with their website and with the FCA database.
• Use the FCA database to make sure the firm you are dealing with is not a clone firm.
• Seek professional financial advice before making any decisions. Take your time and carefully consider your actions.
• Never give someone you have never met access to your bank account, crypto wallet, or devices.

It is also important to be aware that, like in Ms Evans’ case, just because you have identified and reported a scam, that doesn’t always mean that the fraudsters will leave you alone and move on. In the case of fraud sometimes lightning does strike twice and scammers may try to contact you with offers of safer investments or even recouping your losses with the aim of getting access to even more of your money.

Head of Professional Negligence at TLW, Sarah Spruce, and her team deal with similar complaints every day and she notes that scammers are always trying new techniques to convince victims to part with their money:

“Ms Evans is not alone in being duped by sophisticated, convincing fraudsters who are out to get their hands on, in this case, substantial amounts of money, and often banks have not done enough to protect their customers. Interestingly, Ms Evans’ bank did flag up a much smaller sum after the initial scam, so there are some security procedures in place. Perhaps a case of too little, too late.

The outcome of this case is still to be decided by the FOS, but encouragingly, we are seeing an increase in the Ombudsman finding in favour of consumers, so we will await the decision with interest.

Against this apparent quiet tsunami of scams, I would encourage people to be vigilant when dealing with any sort of investment, particularly if it seems too good to be true – it often is! It is also important to look out for vulnerable relatives and friends, including the elderly or financially naïve, such as young adults.”