It’s an unfortunate reality that the cryptocurrency space has its fair share of scams, including romance scams.
According to data from the Federal Trade Commission (FTC), Americans lost $143 million to romance scams in 2018 from 21,000 consumer-reported incidents. That’s up from $88 million in 2017 and $33 million in 2015 (from 8,500 reports). Keep in mind, the $143 million lost to romance scams in 2018 only includes reported incidents. The actual amount of money lost is significantly higher.
The FTC also reports that the median dollar amount Americans reportedly lost to romance scams in 2018 was seven times higher than any other type of fraud. Most victims were between the ages of 40 and 69, although people over age 70 reported the highest individual median losses of $10,000.
Romance scams involving the transfer of cryptocurrency are becoming more commonplace each year. Unfortunate as the reality may be, there are steps crypto businesses should take to fight scammers. Individuals who suspect they are being personally targeted have options we’ll explore as well.
In this post, we’ll cover:
- What a romance scam entails
- What you can do if you’re personally targeted
- What crypto businesses can do to help victims of scams
What are romance scams?
In an online romance scam, the scammer contacts the targeted victim through a dating app or on a social media platform like Facebook.
Typically, the scammer creates a fake profile account on the dating app or social media site or copies another person’s account information. Either way, the scammer now has a fake identity that can be used to contact unsuspecting people.
Next, the scammer finds a target (or many targets) and sends a message to start a conversation. Quickly, the scammer showers the victim with compliments and the relationship becomes more serious. Once the victim is emotionally connected, the scammer asks for money to cover some type of immediate or emergency expense.
Throughout the online relationship, the scammer will make excuses about why a face-to-face meeting can’t happen. Saying the scammer is in the military and stationed in a different country is a common excuse.
When the timing is right, the scammer will ask the victim for money. It could be for emergency surgery or to finally schedule a visit to meet in person. Some scammers can get very creative and tailor the request to the victim. The emotionally involved target is usually more than happy to provide their romantic interest with the money they need.
Romance scammers are very patient and very persistent. In fact, it’s not uncommon for victims to send romance scammers money multiple times over an extended period of time for a variety of reasons. It’s a type of psychological scam that can be very lucrative for perpetrators and devastating for vulnerable victims.
Signs you’re a victim of a romance scam
Fortunately, there are some signs people can watch for that are typical of a romance scam. Here are several of the most common signs to look for when someone you don’t know connects with you online or through a mobile app:
- The person becomes enamored with you extremely quickly.
- The person showers you with excessive compliments.
- The person dissuades you from sharing details about him/her or your conversations and relationship with friends and family.
- The person seems too good to be true.
- The person provides inconsistent details about his/her life.
- The person makes excuses so you can’t meet in person.
- The person asks you for money.
- When you talk to your friends and family about the person and relationship, they express concern.
Of course, some scammers are very good at what they do, and some people are particularly vulnerable to this type of fraud. Romance scammers are very good at finding targets they can manipulate, so it’s important to educate not only yourself but your friends and family as well.
Here are some steps you can take to protect yourself from romance scams:
- When someone you don’t know connects with you online, do an image search on Google to see if the photo they use in their profile appears with a different name elsewhere online.
- Ask a lot of questions and actively look for inconsistencies in their responses.
- Talk to your friends and family about your concerns and listen to their feedback.
Your safest course of action is to exercise caution in all of your online relationships and always be aware of that romance scams are very common.
What to do if you’ve been targeted by a romance scam
If you’ve been targeted by a romance scam, you should stop communicating with the scammer immediately. Disconnect your online profile from their profile and block them from emailing or calling you (if you gave them your email address or phone number).
Next, report the scammer to the social media site or dating app where they contacted you and file a complaint with the FTC at ftccomplaintassistant.gov.
If you already transferred cryptocurrency to him/her, there isn’t much you can do to get it back. Some crypto businesses may return the earnings on the cryptocurrency as a gesture of goodwill, but because crypto is a decentralized currency with minimal oversight and zero insurance, it’s unrealistic to expect that the cryptocurrency you gave the scammer will be returned to you.
Your best bet would be to seek the help of law enforcement or a private investigator to attempt to find the scammer and then an attorney to start legal proceedings against him/her if you’re successful.
But at the end of the day, the best way to avoid romance scams is to look for the signs proactively to protect yourself from becoming a victim.
Key takeaways for bitcoin compliance
For crypto businesses, scam detection and prevention should be a core part of your compliance program. Your employees should be trained to look for red flags that could indicate suspicious behavior (such as transactions with unusually high amounts).
In addition, make sure your Customer Due Diligence (CDD) and Know Your Customer (KYC) procedures are adequate to detect romance scammers and file Suspicious Activity Reports (SARs) when suspicious behaviors and transactions are discovered.
The bitcoin compliance experts at BitAML can help your MSB develop red flag routines to better capture scam activities, including romance scams. Click here to schedule a free consultation.