(gentle music) <v ->Hi, this is Derek McGinty</v> with the AARP Fraud Watch Network, and welcome to this learning on cryptocurrency fraud. In this video, we will talk about two main kinds of cryptocurrency scams, crypto as a form of payment in imposter scams, and investment fraud, and we'll explore the tips for protecting yourself, and your loved ones from these scams. What is cryptocurrency? It is a digital currency for use over the internet, and you can transact with it over the phone, your computer, or through increasingly prevalent crypto ATM machines. Those transactions are recorded and secured on a public ledger known as blockchain. Its value as an investment is based solely on supply and demand, and that makes it extremely volatile. It's not backed by the Federal Government, and the regulations are evolving. There are thousands of cryptocurrencies. You may have heard of Bitcoin, Dogecoin, or Ethereum. Criminals have flocked a cryptocurrency, because most of us know very little about it, making it useful in their scams. The AARP Fraud Watch Network is seeing two forms of fraud involving cryptocurrency. One is where an imposter makes the target believe they owe money, and need to act immediately, instructing the victim on how to convert dollars into cryptocurrencies at crypto ATM machines, and then sending those funds to the criminal. The other form of crypto fraud typically happens in relationship scams where the victim is made to believe they can make huge returns by learning how to invest in crypto. This type of fraud is seeing devastating losses. In other crypto investment scams, we're seeing what's known as pump-and-dump and Ponzi schemes. In a pump-and-dump scam, the goal is to get as many people investing in a cryptocurrency offering as possible to inflate the value, and that's the pump part. The dump is when the scammers behind the scheme sell their stake when the value is high making a great return while victims are left with a worthless investment. In a Ponzi scheme, criminals sell you on the investment with promises of huge immediate returns, but early investors are being paid returns with the money coming in from new investors rather than from investment growth. Eventually, the bottom falls out, and most people lose the money they invested. The most common investment fraud happening with crypto comes in schemes where the criminal endears themselves to the victim online building trust over time and then convincing them to invest in crypto together. This is increasingly common in online romance scams. To start our conversation, Kathy Stokes director of Fraud Prevention Programs at the AARP Fraud Watch Network is going to talk about the signs of a romance scam. <v ->Whether crypto is involved or not,</v> online romance scams can begin anywhere online. Romance scams have exploded as our online activity has increased. Now, a romance scam typically starts innocently enough. Someone may reach out to you while you're on social media, or on a dating site, or you may receive a random text that appears to be an error, something like, "Hey, Jackie, how are you?" And you're responding, "Hey, sorry, I'm not Jackie." That's all it takes to start a conversation that can lead to fraud victimization. Now, once the scammer is connected to the target, they work really hard to build a relationship, whether it's one of love or of friendship, and eventually once that trust has been well established, the suitor will share how well they've done investing in crypto and to teach their target how to do it. The scam may start on a legitimate crypto trading platform, but it always moves to another one, which is entirely fake. The target will see great returns, and when they decide to cash out, they can't access their funds. The losses are often devastating. <v ->As you can see,</v> the layers of manipulation run deep, from emotional to financial. Another common way for criminals to build relationships with potential victims online is by impersonating a celebrity. Scammers may create fake social media accounts of famous celebrities. They will troll the real celebrity's social media account, and engage with followers, pretending to be the real celebrity. They may tell their "fans" that they have a special social media account for super fans, and they get the fans to go to the fake social media page. The quote, "celebrity" might offer VIP tickets, an opportunity to meet, a chance to win a contest to be named their number one fan, or they may ask fans to support their favorite cause by donating funds to a charity. Sadly, these scams often leave victims with a big financial loss, and the heartbreak of not actually meeting their favorite celebrity. The scam plays out in similar fashion regardless of the type of payment the criminal seeks, whether cash, gift cards, or cryptocurrency. Let's hear a bit more from Kathy. <v ->The challenge in spotting the signs</v> of an online relationship scam is that the initial contact seems so innocent. In the case of getting a text that seems to have been sent to you in error. It's just our general human nature to respond and say, "Hey, you have the wrong number." If you can stick to a rule of not responding to text from people or numbers you don't know that can really go a long way in prevention. When you are online, some things that will help to spot a potential relationship scam come down to being skeptical. If the person contacting you has a profile, look up your web browser's reverse image search tool, so you can drop that photo in. If that photo shows up connected to any other profile, or it matches an ad online, it's very likely a scam. If the new acquaintance asks to move to a different means of communicating, it could indicate a scam. If the person says they're abroad on work, or military deployment, be especially skeptical. Make sure your profile on your social media accounts is set to be the most private, only allowing friends and family to see your posts, and your profile information. Now, most social media platforms will verify celebrity accounts with a blue check, but even so, it's important to be cautious about who you interact with on social media. If you suspect someone has a fraudulent account, report that account to the social media site, and if you experience fraud, you can turn to the AARP Fraud Watch Network by calling our helpline 877-908-3360. AARP's trained Fraud Specialists will guide you through next steps and provide support. <v ->It is critical to remember a few key tips</v> for spotting and avoiding scams involving crypto. First, as with all new investment opportunities, do your research before investing any money. Only invest with money you would be comfortable losing. Remember, financial fraud is a crime. If you've experienced fraud, report it to the police, and make sure that a police report is filed. You can also call the AARP Fraud Watch Network Helpline at 877-908-3360 for additional guidance and to report a scam. Thank you for watching. (gentle music)

cryptocurrency fraud

imposter scams

investment fraud

pump-and-dump schemes

online romance scams