Lloyds Bank has issued an urgent warning as victims are losing up £11,000 in fake scam adverts posted to social media.
The high street bank has recorded a 23% rise in reports of cryptocurrency investment scams by customers in its banking group between January and September 2023, compared with the same period last year. Investment fraud happens when people try to trick you into investing money, this could be in a range of things such as stocks, bonds, currency or real estate.
In its recent analysis of scams, Lloyds Banking Group - which includes Lloyds Bank, Halifax and Bank of Scotland - found that 66% of all investment scams start on social media with Instagram and Facebook being the most common sources.
The types of scams coming from these social media platforms include things such as bogus ads, fake celebrity endorsements, and targeting through direct messages.
On average, Lloyds Banking Group found that scam victims were losing an average of around £10,741 - this is up from the £7,010 average from last year. This is more than any other type of consumer fraud such as romance scams or purchase scams.
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Lloyds Banking Group noted that the organised criminal gangs behind scams were constantly evolving their tactics to exploit new trends and trick more victims into parting with their cash. Over recent years they've widened their net to target younger investors, who may be tempted by the "get rich quick" promise of cryptocurrency trading.
Cryptocurrencies are a form of digital money operated through a decentralised system - this means they aren't regulated by banks or Governments. In crypto, the value, like traditional money, is based on supply and demand, and then secured by algorithms.
Crypto scams often trick you into investing in a particular cryptocurrency based on a fake potential growth shown to you by a scammer. According to Lloyds Bank, crypto investors typically make an average of three payments before they realise they have been scammed, taking around 100 days from the date of the first transaction before they report it to their bank. By this point, the money is usually long gone, and impossible for the bank to reclaim.
The high street bank said the most common age range for crypto scam victims is 25 to 34-year-olds - this group make up a quarter of all cases.
Liz Ziegler, fraud prevention director at Lloyds Bank, said: "Investing can be a great way to make money, but you need to make sure your money is going to a trusted, genuine company. Crypto is a highly risky asset class and remains largely unregulated, which makes it an attractive area for fraudsters to exploit. If something goes wrong, you're unlikely to get your money back.
"Predictably, social media platforms are the main breeding ground for this type of scam, with a mix of bogus ads, fake endorsements and cloned accounts being key to fraudsters' methods.
"It's time these tech firms took responsibility for protecting their customers, stopping scams at source and contributing to refunds when their platforms are used to defraud innocent victims."
Tips to stay safe from crypto investment scams
Lloyds Banking Group has put together tips on how you can avoid falling victim to a crypto investment scam.
Beware of social media
Fraudsters often put adverts for scam crypto investments on social media. They can also send offers by direct message. They will promise returns that you can't get elsewhere or make claims about "guaranteed" profits. If you’re contacted out of the blue about an investment, it’s likely a scam.
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Make sure it’s genuine
Fraudsters can easily set up fake companies, social media profiles and websites to clone real firms. Use the Financial Conduct Authority (FCA) - the watchdog for the financial industry - website to find genuine contact details for a company and check for warnings about fake firms. Always do your own research or seek professional financial advice.
Check for warnings
Marketing of crypto is now regulated, which should make it easier to spot genuine crypto ads. According to the FCA, whenever you invest in crypto you should see prominent warnings about the risk of losing your money, and you shouldn’t be offered any free gifts to join or refer a friend bonuses.
Keep it to yourself
Never share the login details for your investment account or your private cryptocurrency keys with anyone else. A legitimate firm would never ask you for this. Remember if you transfer funds to another account that isn’t in your name, you have lost control of your money.
Protect how you pay
If you pay by bank transfer and it’s a scam, it’s very hard to get your money back. Fraudsters might ask you to pay an account in a different name to the company you are meant to invest with. If the names don’t match, it’s a sign of a scam. Paying by card always offers the greatest protection.
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