FTC: Social Media Investment Scams Cost Consumers $3.8 Billion in 2020

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Social media is awash with scammers promising huge returns on investment, and consumers lost billions of dollars to them last year. Troy Gochenour, 50, of Columbus, Ohio, was one of them, being conned out of $25,800 in a crypto-mining scam.

He had recently moved home to restart his life, and he said he was lonely, which led to him starting online dating. It was then he was sent a WhatsApp message from a stranger, which began “Sorry to bother you.”

Last year, the U.S. Federal Trade Commission (FTC) reported that financial scams, including cryptocurrency schemes, cost consumers $3.8 billion. The rise of such scams can be attributed to the speed of the internet, the increase of online payment platforms and apps, and the spread of financial misinformation, as well as the effects of pandemic-era isolation and loneliness.

Gochenour was taken in by the scammer who kept talking about “liquidity mining”. After setting up a crypto wallet, it seemed as though the money he transferred there was growing as promised. He was “hooked” on the scammer, who said they could make all this money together. But it was all a ruse – when he woke up one day, the money had vanished.

He was then told to put in another $10,000 to get all of his money back, plus bonuses. Gochenour continued to add money to his wallet when prompted, thinking he was about to get $200,000, but it was all fake. He now works with the Global Anti-Scam Organization to investigate similar frauds and to help others.

To avoid being taken for a ride, be aware of the following:

– Signs of an investment scam: They will often sound quick, easy, and low- or no-risk, and may involve real estate, cryptocurrency, financial coaching, or gold. Typically, the company will use words like “proven” and “guaranteed”, along with testimonials from people claiming to have benefited wildly.

– If you suspect an investment scam: Take time to research the offer and then run it by a friend or adviser. Don’t accept any unsolicited offers, and reject any high-pressure pitches.

– Crypto investment scams: If the scammer asks you to send money in advance for any reason, it’s a scam. Never mix online dating and investment advice.

– Other investment frauds: Investment coaching and real estate coaching often promote “risk-free” training with promises of financial freedom. Be wary of phrases like “sure thing”, “security for years to come” or the chance to “rake in money by working part-time or at-home”. With precious metals and coins, watch for scammers who tell you there’s no better time than now to invest.

If you think you’ve been scammed, report it to the BBB, the CFPB, the FTC, and the Internet Crime Complaint Center. The real scale of losses is greater than reported, as many people are embarrassed to have fallen for these schemes, so it’s important to speak up and help others.

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