Last year, the FBI reported that American Senior Citizens lost over $1 billion US dollars to crypto scams. The figure is a troubling 78% increase on 2021’s figure and a jaw-dropping 95% increase on 2020’s $55,056,091 loss. It seems that cryptocurrency crimes are well and truly on the rise, but with more than half of all over 60s in the United States admitting that they know next to nothing about crypto, what can silver surfers do to avoid falling victim?
Whether you are a senior citizen yourself or simply have a family member who has shown an interest in bitcoin and cryptoassets, it is important to stay safe and we at BanklessTimes.com have looked at the points you should consider before making a transfer. We’ve also explored some of the red flags that might suggest that a cryptocurrency crime is taking place. With a fourfold increase in crypto crime over the past 12 months alone, let’s hope that 2023 is the year that we stay savvy and beat these scammers at their game.
Cryptocurrency scams take many guises, from dodgy tech support salesmen demanding cryptocurrency to fix non-existent internet issues, to ransomware attacks when a senior citizen may find their computer files encrypted until a bitcoin ransom has been paid.
The most common cryptocurrency crime in 2022 was investment-related. In the US alone, this had 3,292 victims in 2022, causing a combined loss of $716,466,087. Cryptocurrency investment scams usually start out with adverts on social media, so if your elderly relative is often found browsing Facebook then read on to ensure that they stay safe.
While investment scams can take many forms, the most frequent ones start out as advertisements on social media, usually featuring individuals with incredible success stories about how they gained great riches investing in cryptocurrency. In reality these are usually Ponzi scams, where money is not in fact invested at all and cash from new investors is used to pay earlier investors what they assume to be large returns. This in turn entices more backers, but as soon as new investment slows everyone loses out.
The best way to avoid these scams is to be wary of any offer that sounds too good to be true. If an investment opportunity promises to pay high returns, remain sceptical. Legitimate investments are unlikely to provide high returns without a degree of volatility and risk.
Elder Abuse Prevention Ontario Has Great Resources
Education is one of the key ways of ensuring that the older population stays safe, and organisations such as Elder Abuse Prevention Ontario have published additional indicators and warning signs of elder financial exploitation (EFE) involving crypto assets. Thanks to their familiarity with these indicators, the staff at Coinbase were able to identify a case of government-imposter fraud, which saw an elderly victim led to believe that a government organisation had instructed her to settle a debt by paying in cryptocurrencies. In this instance, law enforcement officers were able to seize the assets taken by the scammer and return them to the victim.
Unfortunately, with cryptocurrency still unregulated in the United Kingdom, getting your funds returned isn’t always straightforward and it’s often better to spot the warning signs before you or a loved one falls victim.
Five Red Flags and Indicators of Elder Fraud in Crypto
An elderly individual opens an account at a cryptoasset exchange, despite demonstrating minimal or no knowledge of cryptocurrency. They then begin making numerous transfers to an associated crypto wallet for no clear reason.
An elderly individual starts using their debit or credit card to make frequent and/or high value purchases of cryptoassets.
An elderly individual funds their purchase of cryptoassets with substantial savings from a retirement account.
An elderly individual starts making large cash withdrawals from their bank account and indicates that they intend to deposit the funds at a Bitcoin ATM.
An individual of an elderly relative starts trading cryptoassets in inexplicably large amounts that appear to be beyond caregiver’s own means.
How Can Senior Citizens Stay Safe?
One of the best ways to avoid falling victim to a cryptocurrency scam is simply to resist the temptation to rush into an investment decision, and research thoroughly before taking any form of crypto-activity. Take your time to look into the project, team and technology behind the idea, and read user reviews, although be sure to look to credible and verified sources for this, as they are often the best way of assessing the legitimacy of the project.
Beware of any unsolicited messages, emails or social media contacts, particularly if they’re promoting investment opportunities or giveaways. Scammers will often use these methods to target unsuspecting individuals. Always verify the legitimacy of such offers through independent sources or discuss them with a relative before you take any action.
“At BanklessTimes we would also recommend familiarising yourself with common cryptocurrency scams, such as phishing attacks, fake ICOs, Ponzi and pump-and-dump schemes” said Jonathan Merry, CEO of BanklessTimes.com
By better understanding the tactics used by scammers, you and your family can stay one step ahead and avoid falling victim to their schemes.