According to new data from the Federal Trade Commission (FTC), bogus cryptocurrency investments resulted in an unrivaled increase in internet fraud last year. Because while cryptocurrency is gaining popularity, there’s still a lot of uncertainty regarding how it works.
FTC says crypto investment scams have increased in 2021
This is especially true among younger people who are more familiar with using the internet but less financially literate. People ages 18-to-39 were more than twice as likely to report losing money to social media scams as older adults last year. Investment-related scams on social media represented 37% of all reported losses, followed by romance scams and online shopping scams.
Many people use the internet to make their purchasing decisions, which is why investing scams are so frequent on websites. This is especially true for younger consumers who are more familiar with the internet yet less financially educated. People ages 18-to-39 were more than twice as likely to report losing money to social media scams as older adults last year. Romance scams and online shopping scams followed at roughly 37%.
FTC says that:
“Reports to the FTC show scammers use social media platforms to promote bogus investment opportunities, and even to connect with people directly as supposed friends to encourage them to invest. People send money, often cryptocurrency, on promises of huge returns, but end up empty handed.”
Even if fraud did not take place on social media, more than half of those who filed claims said the con started there. According to the FTC, one kind of crypto scam reported to it involves someone boasting about their own success in order to entice people to bogus investment sites.
Investment frauds are by far the most costly for investors, yet they aren’t the most prevalent. The greatest number of complaints to the FCC were from rackets connected to online shopping. Social media scams now account for roughly 25% of all fraud cases in the United States, up 18 times from 2017.
More than 95,000 people made fraudulent claims worth almost $770 million last year on social media. According to the FTC, Facebook and Instagram play an important role in social media fraud, with more than a third of people reporting losing money to an online romance scam attributing it to one of these platforms.
“More than a third of people who said they lost money to an online romance scam in 2021 said it began on Facebook or Instagram. These scams often start with a seemingly innocent friend request from a stranger, followed by sweet talk, and then, inevitably, a request for money.”
In 2018, Google and Facebook banned crypto-related advertisements. Last summer, Google made them available again in a limited capacity.
