With so much talk about investing and cryptocurrency these days, many people don’t want to miss out on an opportunity. But when there’s lots of money involved, the scammers come out. Recently, Better Business Bureau learned of a frightening new investment scam.
BBB of Central New England spoke with a scam victim who lost $20,000 working with someone claiming to be a broker in a downtown Worcester office.
“Marissa” the broker was really just a front for a con artist, who used sophisticated tactics to steal the victim’s money.
The victim, Katy, a young adult who researches videos on YouTube on ways to make money, found Marissa’s contact information in the YouTube comments section, where someone said she’s honest and a good broker. Katy looked Marissa up on Google and things appeared to check out. A fake website looked authentic. Marissa even sent Katy a copy of a fake driver’s license. Katy started texting with Marissa and put $20,000 in an online “wallet” to invest in cryptocurrency.
BBB President and CEO of BBB of Central New England, Nancy B. Cahalen, explained that the alleged broker had assumed the name of a real broker online for one of the largest financial institutions in the country. She even had Katy sign a contract, which showed the broker with the address of an actual firm in Worcester.
Katy can no longer access her funds and Marissa shut off all communication with her.
“There are multiple victims here,” Cahalen said. “Of course there’s Katy, who lost $20,000, but there’s also the real Marissa who has had her reputation tarnished, as well as the firm at which the scammer claimed to work.”
After Katy reached out to Better Business Bureau, BBB representatives investigated. What they found is an alarming trend.
BBB spoke to a security team official at the financial institution the scammer claimed to be employed. He said registered brokers are being targeted because they are required to publish their information, “so it’s kind of there for the taking,” he told Better Business Bureau. “[Scammers] are using that information to make fake websites. It brings a false sense of security (to the victim).”
These fraudsters are advertising on social media, on Instagram, Facebook and in the comments section on YouTube. According to the banking security officer, they are attaching their comments to legitimate how-to investing videos
One warning sign for consumers is the mode of communication. In this case, the victim communicated with the scammer via “WhatsApp.” That should be a red flag, according to the security officer. He advised also examining the content of their messages. They sometimes use broken English and have templated comments on videos like “hey, I’m working with this trader you should also consider working with them.”
This sort of scam is happening with increasing regularity. “People want to get into crypto, but they don’t know how,” the security officer said. “The bad guys are taking advantage because people want to invest in this space and have a fear of missing out.”
The security officer who spoke to BBB is part of his company’s “take down” team, working directly with the FBI. His team was able to disable the site that fooled Katy, but there are many more out there. He said “digital fingerprints” show that there is a cell in Nigeria perpetrating many of these scams.
He added that the bad guys are evolving “and diversifying their portfolio.” He said they use many different hosting providers so it becomes more difficult to shut them down.
There’s little chance Katy will see her $20,000 again, but she said she hopes her misfortune is a warning sign for others. “When someone has a problem, [BBB] is the place to report it,” she said.
Gerri Walsh, president of the FINRA Investor Education Foundation, said the biggest red flag in financial scams can sometimes be the hardest to recognize. “When someone tells you they have the ‘secret sauce’ that should set off alarm bells. You should take a step back. You have to do everything in your power to make sure things are legitimate.”
Walsh added that scammers are very sophisticated, “and if you lose money in these types of scams it’s important to come forward to law enforcement and places like BBB and to tell your story.”
Consumers who do lose money to scammers in cryptocurrency scams should report their losses to the proper authorities. BBB also suggests providing the information to Scam Tracker at BBB.org/scamtracker so that others can be warned about current methods.
Cahalen said that it’s important that people report scam artists to BBB’s scam tracker even if the victims didn’t lose money. “In addition to alerting consumers about potential scams in their local areas, these local scam tracker reports are often used by law enforcement to assist in identifying and prosecuting scammers,” she said.
The FBI and the U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy recently put out an investor alert, warning that “fraudsters may misappropriate the name, address, registration number, logo, photo or website likeness of a currently or previously registered firm or investment professional. They try to trick investors into believing that they are registered by using a number of tactics.”
BBB has a list of agencies and organizations to call in regard to scams:
Better Business Bureau — Report a scam online at BBB.org/scamtracker.
- Federal Trade Commission (FTC)— file a complaint online at reportfraud.ftc.gov or call 877-FTC-Help.
- Internet Crime Complaint Center (IC3)— file a complaint online at ic3.gov/complaint
- U.S. Securities and Exchange Commission— SEC.gov/tcr
For more tips on how to avoid scams, visit BBB.org/SpotAScam.