That's some super sick matrix stuff you're doing there bro...
With the increasing popularity of Crypto-currencies, the market is currently being flooded with new users at such a huge rate, some exchanges are struggling to keep up! While this is great for the community, it unfortunately means that scams, and con artists have put themselves into overdrive, preying on unsuspecting victims. Many of these scams you may already have heard about!
So whether you've been in the space for a while and need a refresher, or only just starting out and need the 101, here is a top 5 list of shady things to look out for.
If your job interview is over Facebook messenger, chances are, its not a real job...
1. Job Scams
There has been a rising trend with these sorts of scams, due to it being so easy now to make things look "legit" to an unsuspecting victim. These sorts of scams prey on some of our most vulnerable - low income house holds who are struggling to find work.
A scammer will create a business that looks 100% real online - Website, social media, email addresses, phone numbers and sometimes even physical addresses. They then post up ads on Job seeker websites, claiming they wish to hire someone as "account managers" or "payment processors" looking to work from home, for 20 minutes a day, and want to earn some easy money.
The job description seems simple enough, the company that wants to hire you is headquartered overseas, and is looking for a local manager to help purchase Crypto's on their behalf in your local currency and send it back to them. They usually use excuses such as, "market is better over there" or "We cannot buy bitcoin here due to legal restrictions", hence they need to hire you to complete the work.
Once you submit some official looking paperwork to their HR department containing all your personal information and ID, The company then starts wiring money to you from their company account, to use to purchase the Crypto with and send back to them - with 20% being kept by you as part of your wage. Unfortunately, the money being wired to you isn't from a company account - the company doesn't exist. Instead the money is coming from accounts that have been hacked or stolen, which means the money will need to be paid back. With your employer now no where to be found, and the bitcoin already sent, there's only one person left to foot the bill...
Hot tips:
Always check out the details provided by the company. A quick google search of their contact information (such as addresses and phone numbers) can often reveal that the details given have already been reported, or false.
Check if the company is registered and has an ABN/ACN. If it doesn't, steer right away
NEVER purchase Crypto's on behalf of someone you don't know. Crypto-Currencies are Irreversible and can often result in you losing money.
If you became a millionaire overnight, would you tell a stranger half way across the world how you did it, for free?
2. Investor scams
They're about as common as your Nigerian Prince who wants to send you his fortune. E-mails, text messages, social media messages and even letterbox flyers, telling you, how you can make a 150% return on your Crypto, by investing in their trading pool.
Anyone who contacts you unsolicited claiming they can make you rich should be ignored. Not only could it be an outright scam on taking your money for nothing, phishing links and viruses are commonly attached to their correspondence. So avoid clicking anything, just ignore, report, delete and block!
Hot tips:
Be wary of messages that include key words and phrases such as "passive income" or "Guaranteed XX% return". If it sounds too good to be true, then it probably is.
Avoid services that are described as being a "Ponzi" or a "HYIP" (High Yield Investment Program) as these can often "reward" you to refer others to join as well. These sorts of services are designed to "pay out" for a short period of time, before disappearing with your money.
A good indicator of something fishy going on, is heavily moderated chat rooms/forums discussing the service. If you find the behavior of the participating patrons almost "cult-like" and notice negative not questionable enquiries being deleted/blocked by administrators, then this can be seen as a sign of withholding information.
Just because a business has a catchy name, doesn't necessarily mean it's trustworthy... Trust me...
3. ID Scams
The peer 2 peer trading market is booming right now, with users opting to trade directly with each other, as apposed to going through Exchanges and other services of the like. But do you know who you are actually dealing with? With services like LocalBitcoins, just about anyone can make an account and start posting up advertisements to sell their Bitcoin to others - on the condition that you provide ID.
While providing ID to purchase bitcoin is nothing new, or to be concerned about, you should be cautious of who you are sending your ID to. Like with the RE/FE scams above, scammers will entice you in with a too-good-to-be-true rate. While you may think you are getting a great deal, these shady vendors are making more off you than you may think, by collecting your ID and selling it to Fraudsters on the dark net market.
Services who handle private information - such as your personal identification - need to be registered with the OAIC - the Office of the Australian Information Commissioner. This can only be done if the service has an ABN/ACN and means that, once registered, they need to comply with the Australian Privacy act. This also means that as a consumer, you can make a formal complaint about said service, if you believe your information is being mishandled.
Hot tips:
Use services that come recommended to you by people you know or trust; a "real person" review is worth more than 10 faceless forum accounts.
Check to see if the service you are dealing with is on the Australian Privacy Register
Check if the service has a registered ABN/ACN
Ask for a copy of the services privacy policy (this should be publicly displayed at all times)
Just because you spend imaginary money, doesn't mean you should receive imaginary goods...
4. Release Early/Finalize Early scams
Everyone loves a good deal, but sometimes that "good deal" can turn very bad, very quickly. Release Early (RE) or Finalize Early (FE) scams consist of users sending their Crypto to the merchant, before they have received their money (when selling Crypto) or product (when purchasing).
In some instances, sending directly to a business or service is OK, if they're trustworthy - but even then, reviews and feedback can be easily manipulated by the merchant, so its always a good idea to do a bit of research, before engaging in their services.
The main attraction to these sorts of scams by unknowing victims is by adverting a rate that is far beyond what others in the market are offering. Sure, its OK to be competitive, but offering to purchase someones Bitcoin 20% above the market rate with no evidence of payment should be sounding some serious alarm bells - Not to mention, even payment receipts (such as screenshots of bank transfers) can be easily manipulated to show someone has"paid" you with a program as basic as Microsoft Paint!
Hot tips:
Use services that come recommended to you by people you know or trust; a "real person" review is worth more than 10 faceless forum accounts.
Where possible, look for an ABN or ACN. If you do not receive your money or goods, you are still entitled to your consumer rights, and can take the matter up with Fair Trading or ACCC. If there is no business registration present, then proceed with caution!
If you're dealing with someone new, Insist on using an escrow service, even if it means paying more for your product, or selling your bitcoin at a cheaper rate, its still better than losing your Crypto.
I have a van around the corner full of puppies wanna see?
5. Classified scams
While this doesn't necessarily involve Crypto's from the victims side, all too often the money that is lost, ends up being turning into Bitcoin any how!
Whether you're buying a phone, a puppy or even a car, scams on classified sites such as GumTree, Craigslist, Facebook Marketplace, Trading post and eBay are a very common occurrence, and sometimes referred to MITM or Man in the Middle scams.
This usually consists of a scammer posting up an ad for an item they don't actually own - and waiting for someone to enquire about it. It usually ends up being that the "seller" is out of town and cannot arrange to see you, but offers the option of having a friend or family member post you the goods, so long as you deposit the money directly into their account. With the case of Crypto, the account being deposited into is the account of a business who sells Bitcoin, and in turn, you are purchasing Bitcoin for your new scammer/seller friend.
It's a sure fire way of losing your money, and not receiving what you paid for.
Hot tips:
Always ask to view the item in person, if they give you excuses, abandon the deal - its not worth the discount.
When depositing money, make sure the name of the person you are dealing with matches the name on the bank account you are depositing at - and be sure to check this with the bank!
If they ask you to write something funny on the receipt after you have deposited the money, this is a sign your money is not going where it is supposed to.
Some times you just want to faceplant a dried up creek bed...
So.. What if its too late?
If the damage has already been done - or you think its about to be - there's many things you can do help yourself, and potentially save others from the same.
Report it
The best place to start is with ACORN - the Australian Cybercrime Online Reporting Network.
Social media can be your best friend when it comes to getting the word out. If you have been targeted or find something that could potentially rip somebody off, collect the information and post it up for world to see! Whether it be Facebook, Twitter, Forums or even the comments on this blog post, the more people it reaches, the less likely it will be that people fall victim to it.
If you think your ID has been stolen, or your credentials used maliciously, you can contact IDcare - a free service that helps you out if you have become a victim of identity theft.
A final piece of advice...
Its the cliche saying, "If it sounds too good to be true, then it probably is", it was relevant before Bitcoin, and it will remain relevant after its gone. Crypto's are irreversible. There is no "oops I made a mistake" button. Always do your research, do your due diligence, and one all else fails, sometimes all it takes is a little common sense!
Happy Bitcoining!
BB
xoxo