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Crypto scams pose more risks than fraud involving romance and investment.
Better Business Bureau (BBB) has released a new report titled “New Risks and Emerging Technologies: 2019 BBB Scam Tracker Risk Report.” According to BBB employment scams top the 10 Riskiest Scams in 2019.
The report noted that the biggest change from 2018 to 2019 is the appearance of cryptocurrency scams for the first time which ranks second on the list with BBB risk index of 93.8. The crypto scam resulted in a median dollar loss of $3,000 in 2019 from only $900 in 2018. It also showed an increase in exposure from 0.3% in 2018 to 0.7% in 2019.
Crypto scams refer to purchases, trades or storage of digital assets known as cryptocurrencies that involve fraudulent initial coin offerings (ICOs), a type of fundraising mechanism in which a company issues its own cryptocurrency to raise capital. Investors are lured into paying money or trading their own digital assets but the scammer has no intention of building a company. Crypto scams also involve situations when investors store cryptocurrencies with fraudulent exchanges.
According to the report, consumers’ lack of understanding about digital assets gives scammers the opportunity to take advantage of them by convincing them that they will make significant returns on an “investment.” Also, some scams have occurred because consumers purchased, stored, or traded cryptocurrencies on an exchange site that was vulnerable to hackers.
“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,” the report added.
The report shows that crypto scam is riskier than fraud involving romance and investment. Romance scam has a BBB risk index of 64.3, investment has 58.7, and fake payment has 72.7.
Meanwhile, Coinbase CEO Brian Armstrong said that the crypto market can expand up to 5 billion users. However, this might not happen soon as the current crypto users haven’t reached 1 billion yet.
