Cryptocurrency Scams on the Rise as Meta Sued for Fake Ads

You may have seen news about the increase in cryptocurrency scams, with Meta now being sued by Australia over fake crypto scam ads. But are you at risk? We reveal the current scams to look out for and what to do if you fall victim.
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Earlier this year, the Australian Securities & Investments Commission (ASIC) warned of a cryptocurrency Facebook scam targeting self-managed superfund holders via social media ads.

Three months on and false information is still rampant, with Australia now suing Meta over cryptocurrency advertisements claiming to be endorsed by prominent figures.

Between January to November 2021 alone, there was a 172% increase in losses from cryptocurrency scams, equalling more than $109 million, reports the Australian Federal Police.

It’s a harsh reminder to sole traders, business owners and individuals investing in their own superannuation to not use Facebook Ads as an indication of a legitimate service — cryptocurrency or other.

With Australia now in the top three countries for cryptocurrency ownership, it’s a scam that likely won’t go away.

This article is a quick guide to learning the basics of cryptocurrency in business, spotting scams and using cryptocurrency safely in your business.

Disclaimer: The information in this article is for general purposes only and does not take your personal situation into account. It does not replace professional advice or counsel. If you believe you have been scammed, please contact the relevant legal avenue.

What You Need to Know About Cryptocurrency

  • Cryptocurrency is a form of digital currency, which can be exchanged for goods and services as participating businesses. It can also be traded on an exchange.
  • While cryptocurrency is considered a legal form of currency in Australia, it is in the stages of being properly regulated like other fiat currencies (currency tied to the government with value based on supply and demand over intrinsic value, like gold).
  • It is very obvious if someone is hacking or tampering with a particular cryptocurrency blockchain as to exist, the various people in the chain (putting it simply) have to authorise each block.
  • To accept cryptocurrency as payment in your business, you will need to sign up for a cryptocurrency payment gateway.
  • Accepting cryptocurrency as payment is on the rise in Australian businesses, with benefits such as low transaction fees and no risk of chargeback.
  • The value of cryptocurrency may not be subject to inflation or government regulation, but it is extremely volatile, as seen in the recent crash of value.

Common Cryptocurrency Scams in Australia

  • Facebook Ads scams using fake celebrity endorsements.
  • Demand for crypto-only payment for items purchased through platforms like Facebook Marketplace, with no product being delivered.
  • Cryptocurrency investment schemes promising guaranteed returns, normally requesting the unsuspecting users to send money or sensitive information to validate the request, resulting in theft.
  • Ads promoting once-in-a-lifetime offers to transfer your superannuation funds over to a cryptocurrency portfolio while the value is low.
  • Romance scams via direct messages, dating sites and similar, resulting in transfer or funds via cryptocurrency.
  • Phishing scams asking for crypto wallet login credentials, evidentally resulting in loss of control of your wallet.

How to Identify a Cryptocurrency Facebook Scams

1. Assess if the promise sounds too good to be true.

If you see a Facebook Ad or receive a message saying if you invest $1,000, you’ll receive double, even triple, for your investment, this is very likely a scam.

Trading cryptocurrency is like the stock market; while you can make educated guesses, there is no guarantee of return. So, if you are being promised a particular return, run.

This was a common promise of the investment Facebook scams, promising high returns when transferring your superfund over to a cryptocurrency portfolio managed by the advertiser. Some victims of this scam reported being directly contacted via text message, cold call or email, so be wary of these also.

If you are considering investing in cryptocurrency as part of your retirement portfolio, look into legitimate platforms with reputable online reviews. Get a legitimate financial advisor and let them guide you.

2. Look out for being asked to transfer currency for validation.

One of the many ways people are being scammed through fake cryptocurrency schemes is through the organiser asking for a transfer of money or cryptocurrency as a form of authentication. Do not do this.

Some victims advised they went through with this step and the scheme still appeared legitimate, but soon lost access to control of their account or were asked to send further verification funds.

Again, before transferring funds to a cryptocurrency manager or platform, ensure you have researched the platform or have taken a recommendation from a legitimate financial advisor.

3. Investigate the quality of the ad and Facebook page.

When you come across a Facebook post or ad with a cryptocurrency offer you think sounds good and could be legitimate, take a look at both the ad itself and the Facebook page attached to the ad.

  • Are there typos?
  • Are the images high resolution?
  • Does it look like comments have been removed or there are negative comments?
  • Is there a link from the Facebook account to a website?
  • What does the website look like?
  • Are there online reviews for the scheme or person running the offer?
  • Have you looked on other social media platforms, such as YouTube, for negative reviews (or positive?

Many Facebook pages or fake accounts posing as operators for these cryptocurrency schemes are run off-shore, meaning the language doesn’t align with someone in Australia. They will often not be found with a Google search or on other social platforms, which is an indicator the operation is not legitimate.

If you do find a website, be sure not to download anything as any suspicious links may install malware or malicious software on your computer or device. This may lead to identity theft, financial losses and other issues.

It’s also a reminder to enable two factor authentication on every operating system or online account you can, as this will help prevent someone being able to access your account if they do have access. Two factor authentication may include having to set up a one time code to your mobile phone, provide a unique code and more.

You should also setup messages to alert you to suspicious logins of your social media accounts.

4. Check the pages of endorsing figures for mention of partnership.

Meta is currently being sued by Australia for not removing ads from their platform, despite the ads having been reported as scams. In particular, the ads not being removed feature public figures endorsing the scheme, despite the public figure having spoken out about compromised accounts or illegal use of their voice or likeness.

Sunrise host and financial reporter, David Koch is one of many public figures who have had their image used on cryptocurrency schemes they do not endorse.

One of the best ways to detect a Facebook scam featuring a public figure is by doing a Google search of the figure’s name and the scheme, as well as checking their social media accounts. If the endorsement is not coming directly from their account or own mouth, avoid the scheme.

You should also ensure the person has not reported the loss of control of Facebook accounts of other social media accounts. This may be apparent if there are multiple accounts for the person.

5. Don’t accept a friend request from someone you don’t know.

One of the easiest ways you can avoid scams or other scams is by not accepting a Facebook friend request from someone you do not know. This includes not accepting friend requests from people who have a mutual connection through a friend or family member.

You may even receive a Facebook Messenger request from the person you do not recognise, letting you know they’re just trying to make friends. This is a red flag.

A romance scam is actually easier to fall for than you’d think. Scammers who pretend to be connecting with you for friendship or with romantic interest are highly skilled in building your trust.

Once they have built your trust, they’ll start to pose a problem. Maybe they’ll say they themselves have fallen victim to scammers and they need money to pay rent. Sometimes it will be they are having issues paying for flights. They may even make it sound like your idea of sending them money or cryptocurrency. This may even happen over years.

6. Avoid buying products through marketplace with cryptocurrency.

For years, there have been shopping scams where someone is selling or buying an item on marketplace, and have disappeared once payment has been processed through a bank account.

These scams on Facebook still exist, now including cryptocurrency as a payment method.

If you are buying or selling items online through Facebook, try to avoid taking online payments. Taking payment through a PayPal account is thought to be one of the safer methods, as you can make a claim to return funds or report users. But this can take time.

However, with cryptocurrency, once you send those funds, they’re gone.

This is a common scam over the holiday season, with people looking for in-demand items, such as the hard-to-get PlayStation 5.

What to do if you fall for an online scam:

1. Report to Scamwatch.

If you have fallen victim to scammers, report the scam or scheme to Scamwatch.

While the Australian Competition & Consumer Commission (ACCC) are unable to help you recover funds or track down scammers, it will help them warn others of the scam.

You can also lookup current scams on Scamwatch if you suspect you’re being contacted by a fake scheme.

2. Contact your bank.

If you have lost funds, access to your account, had your identity stolen or believe you may be a victim to where scammers pretend to be you, contact your financial institution. You may not be able to recover funds. However, the bank can flag your account to help prevent further loss.

3. Contact the authorities.

Where there is a matter of fraud or a scam, you need to alert the authorities. They will be able to guide you on your next steps and any potential options for recovering funds.

If you have provided the scammers with a copy of your licence or any form of identification, you will also need to let the authorities know in case of fake accounts made in your name. The earlier you can do this, the better.

4. Report scam ads to the platform.

There are so many ways scammers pretend to run a legitimate operation. You may receive suspicious emails, text messages, see ads on Facebook, receive phone calls, even physical letters.

If you have cause to believe there is false information or scams being spread on Facebook or other social media accounts, report this to the platform immediately. While Meta is currently being sued for not following through with many reports, it helps them remove fake news and content offline as soon as possible.

You can report Facebook Ads by selecting the three dots in the right-hand corner and selecting report.

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