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£27m lost in cryptocurrency 'scammers' paradise' - SKYNEWS

MAY 21, 2019

The City regulator is warning consumers to be aware of being lured into bogus 'get rich quick' schemes advertised on social media.

By John-Paul Ford Rojas, business reporter


Fraud victims lost more than £27m to cryptocurrency and foreign exchange investment scams in the last financial year, new figures show.

Reports of the scams more than tripled to 1,834 in 2018/19 compared to 530 the year before, according to data from Action Fraud, the UK's national centre for reporting cyber crime.

Victims lost an average of £14,600 in each case, often lured via social media by the promise of "get rich quick" bogus online trading platforms.

The figures were published as part of a warning by Action Fraud and the Financial Conduct Authority (FCA), the City regulator, about the scams.

It said fraudsters lured victims by promising high returns from investments in cryptocurrency - a type of product of which Bitcoin and Litecoin are among the most well known - and foreign currency trading.


Fake celebrity endorsements and images of luxury items such as expensive watches and cars are typically used to lead consumers to professional-looking websites where they are persuaded to invest.


"Investors will often be led to believe that their first investment has successfully made a profit," the FCA and Action Fraud said.

    "The fraudster will then contact the victim to invest more money or introduce friends and family with the false promise of greater profits.

    "However, eventually the returns stop, the customer account is closed and the scammer disappears with no further contact."

    Action Fraud director Pauline Smith said: "These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms."

    Mark Steward, executive director of enforcement and market oversight at the FCA, said: "Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal."

    The FCA is launching an advertising campaign to raise awareness of the scams.

    Gareth Shaw, head of money at consumer group Which?, said: "Millions of people are at risk of losing life-changing sums of money to fraudsters operating increasingly sophisticated scams."

    He said victims had little hope of getting their money back and called for a more "joined-up approach" from government, police and businesses to prevent people from being scammed and to help them recover their money when they are.

    Mr Shaw added that banks should step up preparations to introduce confirmation of payee name checks "which could cut bank transfer fraud in half overnight".

    Laura Suter, personal finance analyst at investment platform AJ Bell, said: "Cryptocurrency is a scammers' paradise, as many people 'investing' in these assets do little research and are sucked in by the promise of supersized returns in an impossibly short space of time."

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