The week of October 3 is World Investor Week, a great time to remember that the too-good-to- be-true investment opportunity often is exactly that. Investment scams are among the oldest out there. With lots of people looking for a way to make money on investing, there are at least as many looking to take it away. One area where investment scams have thrived as of late is in cryptocurrency, which has taken a quantum leap recently.
A cryptocurrency is an electronic currency — not paper bills or metal coins — that operates outside governments and central banks, such as the Federal Reserve Bank. Owners keep cryptocurrencies, such as Bitcoin, in electronic wallets, which are password protected. You can transfer money between wallets anonymously to buy a pizza, sell a car or even pay a ransom, provided the other party in the transaction accepts Bitcoins.
The Federal Trade Commission received nearly 6,800 complaints of cryptocurrency investment scams from October 2020 through March 2021, up from 570 in the same period a year before. Reported losses during that time grew more than tenfold, to above $80 million.
Three things that are common in crypto scams are: fake websites with bogus testimonials, fake celebrity appeals via direct messages on social media, and buy-now campaigns designed to create pressure to invest right away. If you are thinking about investing in cryptocurrency, remember that most of the consumer protections that exist with traditional investments don’t exist for crypto. Cryptocurrency is ideal for fraud because all trades are conducted anonymously online, you’re putting a lot on the line when you transact in cryptocurrency. “You’re interacting with people you never meet and you can never visit.
Here are four points to remember before investing in cryptocurrency:
Make sure you know the risks. Don’t put money into a virtual cryptocurrency investment unless you really know how it works.
Resist the pressure to buy-right now.
Do not speculate in cryptocurrencies with money you can’t afford to lose.
Do your homework and explore any cryptocurrency platform before you give them your credit card or any personal data.
Be a fraud fighter! If you can spot a scam, you can stop a scam.
The AARP Fraud Watch Network is a free resource for all. Learn how to proactively spot scams or get guidance if you’ve been targeted. Visit www.aarp.org/fraudwatchnetwork or call our dedicated helpline to speak to a fraud specialist at 1-877-908-3360.
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