BBB Scam Alert: Scam artists await as we decrypt the current cryptocurrency craze
Cryptocurrency is always in the news these days. It’s an emerging sector, and when something promises great wealth and opportunity, the bad guys come out in force.
Better Business Bureau’s Scam Tracker features cryptocurrency losses on an almost daily basis. Many smart and knowledgeable people are falling prey to scammers who are making thousands, if not millions, of dollars from unsuspecting victims.
If you are thinking about investing in the stock of companies that tout high returns associated with cryptocurrency — use caution. Do your research, and only invest money you can afford to lose.
One area where Scam Tracker seems to be showing plenty of cryptocurrency cons is on social media. Often someone, pretending to be a friend, will reach out to you through a message app, and tell you about a great opportunity with a cryptocurrency. That person has often stolen your friend’s social media account. You believe you are talking to a good friend and follow their advice. Soon you are making all sorts of money on a site, but when you go to take your money out, your “friend” and the people you were doing business with disappear.
A victim who lost $1,000 submitted to BBB Scam Tracker just that sort of story: “This person contacted me through my friend’s Instagram account, this impersonator made it known to me that he/she got paid through this platform. I believed because I was under the impression I was talking with my actual friend, little did I know the account was hacked. Long story short, I fell for the scam and reporting this in hopes that it never happens to someone else, I hope this reaches all before it’s too late.”
Promises of great wealth go by the boards. Another victim who lost $3,700 wrote on Scam Tracker, “They refuse to give you your money back or let you withdraw the money first and pay the fees. Every option requires you sending them thousands of dollars with the risk of never getting anything back.”
Follow These Tips to Avoid Crypto Investment Scams
If you are contemplating a crypto-related stock investment, here are six tips to help you steer clear of scams:
- Do not say “yes” to cryptocurrency stock purchases from an aggressive cold caller, even if the claims sound plausible, particularly if the recommended stocks are very low-priced. Don’t feel guilty about hanging up. Not answering at all, or putting down the phone, are generally the best and safest responses to a cold caller or anyone aggressively pitching low-priced stocks or other investment opportunities.
- Be suspicious of anyone who makes guarantees that an investment will perform a certain way. Also, be wary of pushy sales pitches that encourage you to “act now.”
- Research opportunities before investing. Use FINRA BrokerCheck® to check registration status of, and for additional information about, the people and firms who tout these opportunities.
- Find out whether a company files with the Securities and Exchange Commission. Check the SEC’s EDGAR database. Read the reports and verify any information you have heard about the company. But remember, the fact that a company has registered its securities or files reports with the SEC doesn’t mean that the company will be a good investment in general—or the right investment for you.
- Be wary of stocks with huge spikes in price. This could signal potential manipulation or fraud.
- Know where the stock trades, and pay attention to any cautions associated with the stock. Most stock pump-and-dump schemes tend to be quoted on an over-the-counter (OTC) quotation platform like the OTC Markets, which provides icons to warn investors of concerns associated with a given company. These include a stop sign to indicate the company cannot or will not provide important information to regulators, exchanges or the OTC Markets—and also a skull and crossbones to warn that the security, company or a person who controls the company might be involved in a spam campaign, questionable marketing, regulatory action or more.