The Federal Trade Commission reported that, since October 2020, consumers have said that they have lost more than $80 million in connection with cryptocurrency investment scams. The FTC said that this amount is ten times more than the losses reported during the prior year.
As Lesley Fair wrote on the FTC's blog, "the number who report getting stung by cryptocurrency investment scams has skyrocketed."
The FTC said that cryptocurrency investment scams take on a variety of forms. For example, some start as investment tips in online message boards that lead people to bogus investment websites. Another type of scam involves a promise that a celebrity associated with cryptocurrency will multiply any cryptocurrency you send to the celebrity's wallet and send it back. The FTC said that consumers reported losing more than $2 million to Elon Musk impersonators alone since October.
This alert is important information for media organizations and others that accept advertising, since it highlights issues to look out for when developing advertising standards and when deciding whether to accept particular advertising. Some key recommendations of things to look out for, from the FTC's Consumer Protection Data Spotlight include:
- Promises of guaranteed huge returns;
- Claims that cryptocurrency will be multiplied;
- Claims that there are better ways to make money with cryptocurrency (other than the investment in cryptocurrency itself);
- Fake testimonials;
- Celebrity giveaway scams; and
- Requiring payment by cryptocurrency .
Now that the FTC has issued this warning, it will be interesting to see whether the FTC follows up with enforcement. We'll be keeping an eye out for that.
"the number who report getting stung by cryptocurrency investment scams has skyrocketed" -- FTC Senior Attorney Lesley Fair