Southfield, MI - March 2, 2020 – Two years ago, cryptocurrency scams were just emerging as a problem on BBB Scam Tracker, mostly a subset of investment scams. The Better Business Bureau added cryptocurrency as a scam category in 2019 and it leapt to the second riskiest scam, according to the latest BBB report, New Risks and Emerging Technologies: 2019 BBB Scam Tracker Risk Report (BBB.org/RiskReport).
Although employment scams remained the riskiest for the second year in a row, the surprise in the data was cryptocurrency in the #2 spot, with a median dollar loss of $3,000. The report is based on data supplied by consumers to BBB Scam TrackerSM (BBB.org/ScamTracker) and uses the BBB Risk Index, a unique algorithm that calculates exposure, susceptibility, and monetary loss to offer a more accurate assessment of scam risk.
“Scammers take advantage of newer technologies and changes in the marketplace,” said Melissa Lanning Trumpower, executive director of the BBB Institute for Marketplace Trust, which produced the report. “Cryptocurrency scams rose to the number two riskiest scam in 2019 as scammers took advantage of consumers looking to capitalize on these emerging digital assets. Unfortunately, hype and heightened emotion can sometimes prevent consumers from doing their due diligence to investigate offers and exchange sites before making a purchase.”
Cryptocurrency scams occur when the virtual coins are purchased from, traded by, or stored with a person or exchange site that turns out to be fraudulent. Sometimes these digital assets are purchased as part of a fraudulent Initial Coin Offering (ICO), in which investors are scammed into paying money or trading digital assets for a company or product that never materializes.
According to the Risk Report, 68.5% of people that reported a cryptocurrency scam lost money, and nearly one-third of these losses (31.0%) involved the cryptocurrency exchange site C2CX. Additionally, 23.4% of individuals said they purchased cryptocurrency as an investment opportunity.
Unlike money stored in a traditional bank account, which is insured against theft, digital assets such as cryptocurrency cannot be retrieved, and transactions cannot be reversed in the case of theft or cyber hacking.
“Scammers are opportunists,” said Trumpower. “Whatever is in the news or being talked about on social media, they see as an opening. Scammers will also imposter a recognizable and respected organization or brand.”
The ten riskiest scams of 2019 were: employment, cryptocurrency, online purchase, fake checks/money orders, advance fee loan, romance, home improvement, investment, tech support, and travel/vacation/timeshare.
RESOURCES:
For more highlights from New Risks and Emerging Technologies: 2019 BBB Scam Tracker Risk Report, download the infographic at BBB.org/RiskReport .
For the full report, go to BBB.org/RiskReport.
To report a scam, go to BBB.org/ScamTracker.
To learn more about different scam types, go to BBB.org/ScamTips.
About Better Business Bureau Serving Eastern Michigan & the Upper Peninsula: For more than 100 years, the Better Business Bureau has been helping people find businesses, brands, and charities they can trust. In 2018, people turned to BBB more than 173 million times for BBB Business Profiles on nearly 5.4 million businesses and Charity Reports on 11,000 charities, all available for free at BBB.org. The International Association of Better Business Bureaus (IABBB) is the umbrella organization for the local, independent BBBs in the United States, Canada, and Mexico. The BBB Institute for Marketplace Trust is IABBB’s educational foundation.
About the BBB Institute: BBB Institute for Marketplace Trust (BBB Institute) is the educational foundation of the Better Business Bureau. BBB Institute works with local, independent BBBs across North America to deliver educational programs that foster a trusted marketplace by empowering consumers to take control of their purchasing decisions and avoid scams; helping businesses deliver excellent service with integrity and become integral stakeholders in their communities; and publishing research that provides critical insights for the average consumer and informs how we develop and deliver our programs. You can find more information about BBB Institute and its programs at BBBMarketplaceTrust.org.
