Authorities are warning the public to be wary of who they meet online.
“Sophisticated” scammers are luring B.C. residents into what the B.C. RCMP calls “crypto-asset scams,” and victims have lost a combined total of millions of dollars.
In a joint news release with local police, the B.C. Securities Commission and the Canadian Anti-Fraud Centre, the RCMP said Wednesday that $3.5 million has been lost to scammers in the first eight months of 2021.
That’s more than three times the amount lost last year, the CAFC said, and the total may be higher, as only an estimated five per cent of victims report these types of crimes.
RCMP media relations officer Sgt. Kris Clark with Federal and Serious Organized Crime said he has personally been receiving calls from all across the country with reports of cryptocurrency investment scams.
“The scheme here is that the person will never actually invest in a legitimate site or app,” he said. “They’re sending it directly to the fraudster’s wallets, or they’re sending the money through some type of wire transfer service which is virtually untraceable.”
In a warning to potential targets of these scammers, the group outlined how these scams operate, urging anyone involved in something similar to be cautious.
HOW THE SCAMS WORK
In one example, a victim is approached through a dating app or social media site. The scammer appears to build a relationship online with the victim, then later brings up an investment opportunity.
B.C. Securities Commission investigations manager Sammy Wu said the scammer will even do research about a potential target online, to find out their interests before making a connection and establishing trust.
“They won’t pitch you right away,” he said. “They will start (to) befriend you, and then you lay your guard down.”
They then convince the victim to make an initial payment, and sometimes further investments, “which can lead to substantial losses.”
“Cryptocurrency is a hot topic. A lot of people don’t know much about it, but want to invest in it,” Wu said. “So then, they’ll say something to the effect of, I make a lot of money, or I have a friend who knows investing very well.”
Others will take over existing identities. The scammer will identify a person, take over their social media accounts and prey on their friends or family members while posing as that person.
As in the previous example, the scammer will then convince people in their target’s circle to make investments.
In other cases, fraudsters will call a person with a pitch for a crypto-asset investment. For example, they may suggest purchasing Bitcoin or another cryptocurrency. During this call, they’ll convince the victim to provide remote access to their computer.
The scammer will then show a fake website promising substantial returns on investments. According to the group behind Wednesday’s news release, when the scam works, the victim will often continue investing, only catching on when they try to withdraw their earnings.
“Then they weren’t able to,” Wu said. “They’ll always give you a bunch of excuses, either you have to pay more money, to pay certain fees, or you have to pay money for taxes. So that’s when they realize, I’m not getting my money back.”
In a final example, the agencies said fraudsters may claim that they’re going to handle purchasing themselves, taking a would-be investor’s money and promising to buy digital currency. They then cut off communication, once the money is in hand, and disappear.
In many cases, fraudsters do research, investigating their potential victims online before contacting them. They use the information gathered through social media and elsewhere to create a strategy specific to that person’s interest, in an effort to ensure they’ll hook their target.
HOW TO PROTECT YOURSELF
The agencies behind Wednesday’s announcement say the best ways to avoid these scams include never sending money to someone they haven’t met in person, and being cautious about unsolicited offers.
Wu said the securities commission is reminding people to do their due diligence when looking at an investment and consider talking to a professional financial advisor, or visit their InvestRight webpage for advice.
“Just be careful. When you meet someone online, pitching to you about investment in cryptocurrency that’s going to make you a millionaire in a short period of time, I wouldn’t believe that,” he said. “Don’t take advice from some stranger on social media platforms. You’re not going to walk down the street and meet somebody, and if they say hey, give me $1000, you’re not going to do that. You shouldn’t do that online, either.”
Would-be investors should be skeptical of anything with a guaranteed high return, especially if there appears to be little to no risk.
Resist pressure, especially if being rushed, the groups advise. Fraudsters often make comments that suggest their victim is missing opportunities by waiting.
If a document or explanation is overly complex, ask questions about it, and if they aren’t answered, walk away.
And for those who do want to buy crypto-assets, do so through a registered trading platform.
Anyone who thinks they’ve been targeted by a scam, or knows someone who has, is asked to report it to police and the CAFC, even if no money changed hands.
Sgt. Clark said coming forward to report a fraud can help to direct more investigative resources towards a particular area, such as the emerging trend of cryptocurrency scams.
“Reporting is traditionally very low with frauds,“ he said. “A lot more is happening out there than is being reported, and we want to know about that.”