Surge in investment crypto scams driving losses towards record levels
- Investment, particularly cryptocurrency, scams make up almost half of losses in 2022
- $4.1 million dollars were conned out of 71 WA investors so far this year
- Potential investors urged to first seek professional advice from a licensed advisor
Investment scams mostly involving cryptocurrencies are driving a surge in losses reported by WA victims to record levels in 2022.
These scams now represent almost a half of total losses with 71 investors being conned out of $4.1 million in the first half of this year. That’s a 32% increase on the same period last year.
Overall, 557 WA victims in all scam categories have lost a total of $10.3 million in the first six months of 2022, heading for an annual record high if the upward trend continues. Dating/romance scams saw almost $3.2 million lost by 37 victims. Online shopping and classified buying and selling scams had the highest number of victims.
In 2021, the calendar year saw record losses amounting to $14.8 million reported by 1,041 WA victims. These statistics are derived from reports to WA ScamNet and represent only a small proportion of actual scam losses as most would go unreported.
The sharp rise in WA scam figures was reflected in national statistics released recently by the Australian Competition and Consumer Commission (ACCC) which estimated record losses of more than $2 billion Australia-wide for the 2021-22 financial year:
Commissioner for Consumer Protection Gary Newcombe said heightened public interest in cryptocurrency investments is resulting in people becoming vulnerable to scams.
“Get rich quick proposals are very tempting at a time when the household budget is under pressure and people are desperately looking for opportunities to get better returns on their investments,” Mr Newcombe said.
“Cryptocurrency is a very ‘high-risk’ investment. It is not legal tender in Australia and is not well regulated. The price can fluctuate at extreme levels based on market speculation and the way trading in cryptocurrency works makes it easy for people to hide their identity.
“Consumers are advised to never respond to any investment offers, particularly involving cryptocurrency, that come via cold-calls, emails, SMS or social media advertising.
“The unauthorised use of photos of successful businesspeople, financial gurus and celebrities in fake social media ads can add to the appeal, or approaches can come from messages or texts from friends who have had their accounts hacked. It’s not uncommon for those involved in romance scams to be offered an ‘investment opportunity’.
“To make the bogus investment scheme seem genuine, scammers go to extreme measures to set up fake yet professional-looking websites, as well as digital wallets, to give the impression that the investment is secure. A fake rapidly growing balance creates excitement, along with the false belief that the victim has made a good investment decision.
“The scam is often exposed when the investor tries to retrieve their investment and the request is greeted with many excuses as to why the money can’t be withdrawn at that time. Often the victim is told they have to pay fees or taxes upfront before the funds can be released but, in many cases, the scammers will cease contact and the fake accounts are no longer available.
“However, there are some cases where the scammers may allow a small withdrawal to gain trust and give the investor confidence to invest more of their money.
“So be wary of any investment that offers high returns for little or no risk and get professional advice from someone with an Australian Financial Services licence before making any significant financial investment.
“It is also an increasing trend for scammers to ask for payments to be made in cryptocurrencies, mostly Bitcoin. Such demands should raise a red flag as no legitimate companies or organisations will accept this type of payment method.”
Tips to avoid becoming an investment scam victim:
- Do not respond to investment opportunities that come to you out of the blue;
- Be wary of any investment offering a high return with little to no risk;
- Only invest an amount you can afford to lose;
- Be aware that if you have invested, you shouldn't be required to pay any further funds or provide your personal information in order to withdraw funds;
- Get independent financial advice before committing to any investments. Only use operators with an Australian Financial Services (AFS) licence, or those who are authorised by an AFS licensee. A register search is available on ASIC’s Moneysmart website which contains more information about Bitcoin and other virtual currencies; and
- If you think you have been scammed, contact your bank or financial institution as quickly as possible and report cryptocurrency scams and losses via the WA ScamNet website or call 1300 30 40 54.
Media Contact: Alan Hynd, (08) 6552 9248 / 0429 078 791 / firstname.lastname@example.org
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