Thieves are eager to get in on the crypto action through swindling unsuspecting investors, according to one expert.
"Scammers follow the headlines, just like you and I," Amy Nofziger, director of victim support for AARP's Fraud Watch Network, told Yahoo Finance Live recently (video above). "What to watch out for are guarantees on your money. Crypto is a very volatile investment. … No one can guarantee your money."
Nearly 6,800 consumers reported more than $80 million in cryptocurrency-investment scam losses from October to the end of March, according to the Federal Trade Commission (FTC), marking a more than ten-fold year-over-year increase. The median loss was $1,900.
Investors can protect themselves if they watch out for a few warning signs.
'100% a scam. Do not trust them.'
First, according to Nofziger, be wary of anyone asking you to pay through a crypto ATM machine, which can be found at grocery stores as well as other common retail locations.
"Next time you're at your local grocery store, look up by the customer service counter and you will see a crypto ATM machine," she said. "And the scammers know this, and they'll be sure to help you find the closest one to you.
Furthermore, always inspect the crypto website you're visiting. Double-check the spelling of the website name in the URL and don't just assume the first search result for a crypto website is credible.
"We know scammers will create fake websites in the attempt to confuse you so you think you're on the legitimate website but it's maybe one word or a letter off," she said. "And you're actually just giving all your personal information to the criminal."
If you're dealing with an unfamiliar website, Nofziger advised, you can cross-check the company with the Better Business Bureau or type the name of the company into a search engine along with the words "scam," "review," or "complaints" to find out what other consumers experienced with the company.
Lastly, never trust anyone you meet on social media who claims to be a crypto or bitcoin trader or investor.
"Oftentimes when you meet someone online, you ask, 'Well, what do you do for a living? And what are your hobbies?' And you know, they'll just mention, 'Oh, I'm a very successful Bitcoin trader,'" Nofziger said. "100% a scam, do not trust them."
Several kinds of claims of legitimacy can be suspect: The FTC notes that a common scam involves "a promise that a celebrity associated with cryptocurrency will multiply any cryptocurrency you send to their wallet and send it back." (Scammers impersonating Tesla CEO and crypto enthusiast Elon Musk stole more than $2 million in less than a year.)
'Some people believe reporting isn't important'
If you find yourself a victim of a cryptocurrency scam, here's what you should do.
First, stop any communication with your suspected scammer. If that person has access to your passwords for your social media or bank accounts, change them immediately. Seek assistance from your bank if you run into trouble.
Second, document as much as you can using emails, other communications, or screenshots of fake websites.
Lastly, report the fraud. The best places to go according to Nofziger are the Commodity Futures Trading Commission (CFTC), Securities Exchange Commission (SEC), or the FTC. You can also file a local police report. If you're working through a legitimate exchange, you can also report it there as well.
"Some people believe reporting isn't important," Nofziger said. "But I think it's crucial to report any time that you are faced with a crypto scam."