Scams target people from all walks of life. Scammers thrive because what they offer you seems genuine, but it is typically too good to be true. Here are a few pointers to help you avoid being a victim of fraud.
Often accept the risk of a scam when approached by an individual or a business entity over the phone, by email, or on a social media site. Be skeptical of deals and don't take them at face value.
Common types of scams
Social Media Scams
Financial services scams
A individual posing as a financial advisor, professional trader, or investment adviser can contact you via social media in some cases. Scammers also ask their victims to download an app so that they can conveniently swap fiat currency for cryptocurrency and send money back and forth.
Important: These con artists can suggest that you download a legitimate cryptocurrency exchange or wallet app. The fact that the app is legal does not mean the scammer is offering legitimate financial services.
Sometimes, these con artists will begin by providing a free trial of their services, in which they trade with their own money and share a portion of their income with the target as a way of gaining confidence.
After their victim downloads the app, the scammer will ask them to send small amounts of money to the app, exchange the money for cryptocurrency, and then send the cryptocurrency to the scammer. The scammer then says that they will use these funds for trading and that they will begin sending ‘profits' to their target's bank account, which will then need to be transferred to the app and transformed into crypto before being sent back to the scammer for more trading.
The sums in this case grow larger over time, and there are always several transactions going back and forth in the same day, which is intended to confuse the target so that they can't tell what is their own money and what is the scammer's.
If something sounds too good to be true, it most likely is. Act with caution if anyone calls you out of the blue and offers you up-front profits as part of a free trial, then actively forces you to participate in an investment or trading scheme.
Impersonating well-known people/companies
Hopefully, most of you will immediately recognize this as being too good to be true. Legitimate companies' social media accounts, such as Binance (shown below), are imitated in an attempt to gain access to your personal information or wallet by impersonating the legitimate business. This can happen if you use a social media handle that is identical to the official one but differs slightly.
Phishing scams
Phishing is a type of fraud in which someone tries to persuade you to give up your personal information so that it can be used for malicious purposes.
Falsely claiming to be a website or service
Clicking on a link that you think will take you to a website (like an online wallet or exchange) but actually takes you to a clone is one of the easiest scams to fall for. The fake site will request your login credentials and/or other personal information in order to sign in to your account on the real site, possibly stealing any available cryptos.
When visiting a website, make sure to check the URL for a lock symbol and that the website address is right, with no odd symbols or characters preceding the https portion. The absence of a S at the end of the HTTP indicates that the domain does not have a security certificate. This does not necessarily imply that the site is a scam, but it does indicate that you should proceed with caution.
Obtaining details by sending bogus emails
Who hasn't got the classic email from a Nigerian prince in desperate need of assistance with a bank transfer? Many crypto scammers will send fake emails in an attempt to obtain your personal information, similar to the previous example. They will often send emails that seem to be from an official source and ask you to ‘confirm' your information. As a result, they have complete access to everything in the account until this occurs.
Scams involving Ponzi or pyramid schemes
A Ponzi scheme is a business model in which investors profit from the investment of new members rather than from the sale of real goods or services. Charles Ponzi coined the term after promising investors 50 percent returns in just 90 days.
There are a few red flags to be mindful of.
If you're not sure if you've been a victim of a scam, here are some common red flags to look out for:
Receiving unsolicited financial resources or advice for the first time
Guilt and emotional coercion are being used to persuade you to give money or cryptocurrency to anyone.
Social media pressure to share personal information (such as evidence of identity or address)
if you do not reply immediately, you will receive several messages with increasing urgency.
Multiple transactions of varying sizes in a short amount of time - this is designed to confuse you, and make it harder to keep track of what you are paying for and whether you are being paid back in full
if you start asking questions or threaten to contact the authorities, you will be blocked or have your account deleted.
This is not appropriate behavior for a financial professional who is giving investment advice or carrying out investment activities on behalf of their clients.
Never give out your recovery key for any app or cryptocurrency exchange, and never transfer money to an untrustworthy wallet.
How do you avoid becoming a victim of a scam?
Don't open connections in emails from people you don't know. Also, double-check the sender's email address to ensure that the email is coming from the person it claims to be from.
Wherever possible, use two-factor authentication. Even if the scammers have stolen your passwords, this will shield your accounts from unauthorized logins.
Do not give out your Private Key, banking or credit card details, birthdate, or Social Security/Social Insurance numbers to anyone who contacts you over the phone, by email, or via social media.
Paying in advance is not a good idea. Scammers usually promise you profits or tell you that you have earned something, but you must pay taxes or fees up front; most likely, they just want your money.
If you've received an enticing offer but have reservations, take some time to consider it and speak with someone you can trust. Take the time to discuss it with a family member, friend, or financial advisor if you are forced to move quickly, as scammers often try to persuade you that something is scarce or on a limited-time bid.
I've been a victim of phishing before. Lucky is that there is a little amount of money on my account that was hacked