Cryptocurrency fraud is now the riskiest scam for consumers, according to BBB
Cryptocurrency and other investment scams are now the riskiest type of cons in the U.S., with crypto fraudsters frequently cheating their victims out of thousands of dollars, the Better Business Bureau said.
Scammers have found creative ways to cheat investors out of their money, the BBB said in its annual report about the biggest scams of 2023, which is based on 67,000 reports of scams.
About 80% of Americans targeted in crypto and investment scams last year lost money, the BBB reported. The median dollar amount lost was $3,800, "but many people lose much more than that" in crypto scams, said CBS News national consumer investigative correspondent Anna Werner.
Hackers use social media, video game platforms or text messages to contact people and brag about how well their doing financially because of a crypto investment. After the targeted victim replies, the conversation quickly turns into an ask, Werner explained.
"This is where the crooks pressure you to purchase, trade or store digital assets — such as cryptocurrency — on fraudulent exchanges," Werner said.
Cryptocurrency is an unregulated investment space that federal regulators and consumer advocates have long said makes it ripe for fraud. Crypto's popularity exploded during the pandemic as some investors became curious about the craze and poured funds into bitcoin, ethereum, solana and other tokens. Today the industry boasts a $2.65 trillion market cap, according to Forbes.
While crypto has proved lucrative for many investors, it is not without its risks. Companies that were at one time considered legitimate have later imploded, such as FTX, once one of the world's biggest crypto exchanges. FTX melted down in 2022 amid an $8 billion shortfall in funds and allegations that former CEO Sam Bankman-Fried had taken customer money to prop up a struggling hedge fund.
Crypto investors have also reported losing billions of dollars due to hacks or scams. A 70-year-old California woman filed a lawsuit this year against Chase bank after she lost $720,000 to a fraudster in a crypto scam.
Rounding out the list of top financial risks in 2023, the BBB named employment scams as the second riskiest con. That's when a scammer contacts a victim and convinces the person that they've been hired at a company and needs to complete employee information.
In reality, the scammer is stealing someone's personal information. Victims lost a median $1,995 in employment scams last year, the BBB said.
Online purchase scams were the third riskiest, according to BBB. Victims typically log onto a phony website to purchase an item but a scammer doesn't deliver the product. The BBB said victims lost a median $71 in these type of scams last year.