There Are More than a Few Bad Apples in the Basket: Romance Scams Are a Big Business
Polling conducted by the highly respected Pew Research Center indicates that one out of five adults aged between 25-34 years has used an online dating site. Sixty-six percent of all users have actually gone on dates with someone they met online. And some of these sites actually report a high success rate. They do hook up lots of people whose relationships last for an extended period of time, if not permanently. Unfortunately, real dating sites also provide scammers with an opportunity to steal your money, and your heart. Romance scams are a big business.
But there are also more than a few bad apples in the basket. Some of the bad apples are scammers who signed up on the dating sites simply to romance partners into loaning them large amounts of money. And once they have the cash, they disappear. Some of the bad apples are the dating sites themselves, whose business model is to take your money without providing any service.
Romance Scammers on Dating Sites
In 2016, Britain’s National Fraud Intelligence Bureau found that singles in that year alone were conned out of £39 million by scammers they met on dating sites and smartphone dating applications. Ironically, the parties to many of these scam romances don’t even meet.
Studies show that if the scammer masquerades as a man, he typically claims to be an engineer working overseas. In fact, he does work overseas, but as a scammer. If the scammer masquerades as a woman, she typically claims to be a student. Her photo reveals enough cleavage to convince you that you’d like to meet her.
An email exchange develops. It may also evolve into regular Skype calls. You soon learn that the other party needs some money. Maybe it’s for a return flight for the guy abroad so he can finally meet you. If the scammer pretends to be a female student, the money could pay off her tuition for the rest of the semester. And then she can take time off her studies to finally meet up with you. Maybe a mother is hospitalized and the loving son or daughter can’t meet the bills. The bottom line is that they’ll tell you anything to convince you to wire some money. The practice is known as “catfishing.” According to the FBI’s Internet Crime Report, approximately 18,500 U.S. residents were catfished in 2018. They wound up losing a whopping $362,500,761.
Dating Sites that Are Romance Scams
Dating sites that seem to appeal to anyone looking for a quick fling stand a very good chance of being scams. It’s certainly easy enough for a scammer to write up virtually endless profiles of like-minded people and post them online on a fake dating site. Together with suggestive photos. It’s even easier for the scammer to just copy the profiles from a legitimate dating site. And copy racy photos anywhere on line and then simply upload them.
For those who are tantalized, they’ll find that signing up is expensive. There are always a few different payment plans. Inevitably, it will be cheaper to sign up for a number of months. But pay attention to the small print. Your membership will be automatically renewed if you don’t cancel it in advance. To do so you’ll have to jump to another page that isn’t so easy to find. That’s done on purpose to make it harder for you to quit. (And more than a few legitimate dating sites employ the same strategy.)
At any rate, you find a lot of attractive people you’d like to hook up with. You may suspect that some of them are fake, but they all can’t be, right? Sooner or later you’ll hit on one who’s real, right? So you send one a message. And then another to someone else and yet another to someone else, on and on. But there’s never a response. Not even a canned one (like “I’m interested too, please tell me more”). Perhaps at that point you’ll understand that you’ve been had. After all, once the scammer has your money, his job is done. There’s no need to deliver any goods.
If you didn’t get caught up in online romance scams and found your soulmate, there’s always the possibility of falling for wedding scams. In July 2019 a wedding planner from East Yorkshire in England simply disappeared. She allegedly took with her the hefty down payments a number of her customers paid her.
But then the story got more complicated. She also walked off with approximately £10,000 belonging to her boyfriend. To make matters worse, only after her clients filed their complaints with the police did the boyfriend learn that she was married to another man. She and her husband separated two years before. At the time she vanished she also owed £4,000 to him.
Wherever she is, she can always go back to the sort of work she did before becoming a wedding planner. Back then she coordinated funerals.
If you think you’ve been the victim of a romance scam, contact the fund recovery experts at Finance Watchdog.
It’s a Global Problem
The entire virtual currency market reached a capitalization of nearly $2 trillion dollars in just 12 years. By the end of 2017, the price of a single bitcoin was $13,889.99. It is no coincidence that just a few weeks later the U.S. Commodity Futures Trading Commission (CFTC) filed the first three lawsuits against cryptocurrency scams. The suit accused the individuals who ran them of fraud, misrepresentation and misappropriation in connection with bitcoin trading. Law enforcement authorities in virtually every major country are now seeking crypto scammers.
Bitcoin Scammers Are Very Busy
James McDonald, the CFTC’s Director of Enforcement, said that one of the scammers “sought to take advantage of that public interest, offering retail customers the chance to use bitcoin to invest in binary options, when in reality they were only buying into a Ponzi scheme.”
Another of the alleged scammers “engaged in a deceptive and fraudulent virtual currency scheme to induce customers to send money and virtual currencies.” Nonetheless, he never supplied to his clients the supposedly expert, real-time virtual currency advice that he promised. His investors “never saw those funds again.”
The CFTC did not disclose details of the case against the third scammer were it filed the lawsuit.
Cryptocurrency scammers are inventive and never cease to come up with a new way to steal your coins. Most of their victims, however, report falling for one of the five types of cryptocurrency scams below.
Pump and Dump
This is a veteran scam perfected by Jordan Belfort and popularized in the movie The Wolf of Wall Street. Scammers “pump up” or promote an “altcoin” they own in bulk and then sell it off in bulk once the price peaks. Of course, they were the ones who peaked the price in the first place by artificially increasing demand. What made Pump and Dump especially viable for scammers and especially dangerous for investors was the glut in under-sold Bitcoin alternatives (there were 45 of them by the end of 2017). By the way, speaking from his own experience, Belfort called cryptocurrencies “a wolf in sheep’s clothing.” He added that initial coin offerings (ICOs), the initial price for a new cryptocurrency, were “the biggest scams ever.”
They may be popular, but the only ones who profit from online crypto “clubs” are the scammers who run them. Their sites certainly look legitimate. Like binary options sites, they’re also sure to feature photos of satisfied members who claim they made megabucks by trusting the hidden cryptocurrency pros who stand behind the curtain. But again, just like with binary options scams, the last time you see your money will be when you hand it over to them.
Fake cryptocurrency exchanges are easy to find. They’re all over cyberspace. They’re especially dangerous for first-time investors. They will find it hard, if not impossible, to distinguish fake exchanges from legitimate ones. In December 2017, Korean authorities closed down one of them, BitKRX. What was particularly pernicious was that BitKRX usurped the last three letters of its name from KRX, the Korean Stock Exchange. It purposely misrepresented itself in order to provide itself with a veneer of legitimacy.
No scam fits cryptocurrencies as well as fake wallets do. “Altcoins” are bytes of data, rather than metal. Therefore, owners have to park them somewhere online in a “digital wallet.” Innovative scammers with good marketing skills set up their own digital wallets. They then aggressively advertise for customers to come along and park their digital currency. Once they do so, their cryptocurrency disappears forever. And the operators of the fake digital wallet fade into the digital sunset.
Ponzi and Pyramid Schemes
Needless to say, most cryptocurrency investors acquire digital currency because they believe that their investments are going to appreciate in value at a rapid pace. So why would someone offer you a higher interest than the market currently bears? The most obvious answer is because the offer is a red light for a cryptocurrency Ponzi or pyramid scheme. One of them, GladiaCoin, promised to double the value of all Bitcoin deposits within 90 days. It collapsed from its own weight in June 2017. The phenomenon will continue. There are other such online schemes that also employ the same 200%-in-90-days business model. They eventually will collapse as well. The main difference between the operators of these sites and Charles Ponzi, who gave his name to this type of scheme, is that these guys, unlike the late Mr. Ponzi, are anonymous.
If you think you have been victimized by a cryptocurrency scam, consult with the fund recovery experts at Finance Watchdog. Challenging crypto scammers can be very complex and mistakes can cost you. Finance Watchdog analyzes your case and assists you throughout the entire recovery process.
Australia Securities & Investments Commission (ASIC)
Recent ASIC activities have revealed practices in the retail over-the-counter (OTC) derivatives sector which fall short of our expectations. These practices include misleading marketing materials, unclear pricing methodologies, inadequate risk management practices, inadequate monitoring of counterparties, inappropriate referral arrangements.
Canadian Securities Administrators/Autorités canadiennes en valeurs mobilières (CSA/ACVM)
Forex trading is generally regulated as trading in either a security or a derivative, and its regulation varies under applicable provincial and territorial securities and derivatives legislation. Under either of these categories, firms or individuals seeking to offer Forex trading services (be it by way of providing access to the market such as by acting as a broker or by providing advice with respect to trading, or both), must be appropriately registered in the province in which they intend to so act and must also be a member of the Investment Industry Regulatory Organization of Canada (IIROC) if they intend to offer forex trading services on margin.
Manitoba Securities Commission/La Commission des valeurs mobilières du Manitoba (MSC/CVM)
We’re already seeing the people and companies behind Binary Options fraud changing tactics in some cases, diversifying into products like Forex and Contracts for Difference (CFDs).
European Securities and Markets Authority (ESMA)
We have noticed an increase, in some European Union countries, in unauthorised firms offering transactions, or platforms to trade, in currency derivatives in the forex market (such as “contracts for difference” [CFDs], “FX forwards”, and “rolling spot contracts”). So, we are warning investors against dealing with unauthorised firms offering foreign exchange investment.
Autorité des marchés financiers (AMF)
While online trading in the foreign currency market with regulated operators leads to losses for the majority of clients, individual investors must also be wary of fraudsters in the market. Numerous firms operate in France without the authorisations required to offer services to the public. The AMF receives many complaints from individual investors who have succumbed to enticing promises in numerous Internet advertisements. The serious façades of some websites are actually hiding frauds. Using impressive marketing, these firms take the money of clients who then find they have limited or no recourse due to the location of fraudsters, who are usually abroad.
Financial Conduct Authority (FCA)
UK consumers are being increasingly targeted by unauthorised forex trading and brokerage firms offering the chance to trade in foreign exchange, contracts for difference, binary options and other commodities. They promise very high returns and guaranteed profits, either through a managed account where the firm makes trades on the investor’s behalf or by trading using the firm’s trading platform.
U.S. Commodity Futures Trading Commission (CFTC)
The Forex market is volatile and carries substantial risks. It is not the place to put any money that you cannot afford to lose, such as retirement funds, as you can lose most or all it very quickly. The CFTC has witnessed a sharp rise in Forex trading scams in recent years and wants to advise you on how to identify potential fraud.
The CFTC has seen an increase in the number of Internet websites fraudulently promoting commodity trading systems and advisory services. These websites falsely claim, among other things, that advertised performance results are based on real trading when, in fact, the results are based on hypothetical trading. No trading system can guarantee profits! The CFTC urges you to be skeptical when promoters of trading systems and advisory services claim that their products and services will earn high profits with minimal risks. Always remember that whether or not a trading system is used, commodity futures and options are typically high-risk endeavors.
Australian Competition & Consumer Commission (ACCC)
Once invested in the scheme, victims have reported that their money begins to disappear quickly. When they try to withdraw from the scheme, they find it impossible to get their money out of the account. The scammer does everything they can to keep the victim in the program but inevitably they stop taking the victim’s calls and, after a short period of time, it is common for the firms to disappear.
Canadian Securities Administrators/Autorités canadiennes en valeurs mobilières (CSA/ACVM)
No individuals or firms are registered to sell binary options in Canada. This fact should be a clear warning to stay away from them. The majority of binary options operations are based in out-of-reach places overseas with few or no financial regulations. It’s common for firms offering fraudulent binary options to hide from authorities, regulators, and their victims with a variety of aliases and misdirection techniques.
European Securities and Markets Authority (ESMA)
These products carry a very high level of risk. They are not standardised and the specific features of the products can be different from one provider to another, including for example in relation to the terms, conditions and costs involved. Studies performed by some national supervisors show that in most cases, retail clients speculating in CFDs, binary options or other speculative products lose the money they have invested. However, notwithstanding these features, in many cases, these products are widely advertised to the retail mass market across the European Union, often via online platforms. Furthermore, it has been observed that these products are also being offered by unauthorised and unregulated entities which further adds to the risk of investor detriment.
Autorité des marchés financiers (AMF)
We have recently received complaints and read many negative reviews on the internet about regulated binary options brokers using indecent practice towards traders. Although some binary brokers may be regulated, we do not recommend opening a trading account with ANY broker, be it a regulated broker or a non regulated broker, as THEY ALL seem to be unethical and non-trustworthy, even the regulated ones!
National Fraud & Cyber Crime Reporting Center (ActionFraud)
Platforms are set up all the time to appear legitimate, but are actually fake. Companies operating these fake Binary Trading Platforms make 100% profit – a percentage of which goes to the brokers and the remainder to the rest of the company. Victims who invested never see any returns and when the customers attempt to withdraw funds it’s made very difficult for them to do so and at times the company ignores them completely ceasing all contact.
Financial Conduct Authority (FCA)
Binary options fraudsters often advertise on social media – the ads link to websites that are well-designed and professional looking. The firms operating the scams tend to be based outside the UK but often claim to have a UK presence, often a prestigious City of London address. Scam firms may manipulate software to distort prices and payouts – they then suddenly close consumers’ trading accounts, refusing to pay back their money.
U.S. Securities and Exchange Commission (SEC)
The first category of alleged fraud involves the refusal of certain Internet-based binary options trading platforms to credit customer accounts or reimburse funds after accepting customer money… The second category of alleged fraud involves identity theft… The third category of alleged fraud involves the manipulation of the binary options trading software to generate losing trades.
Federal Bureau of Investigation (FBI)
Fraudulent binary options website operators go to great lengths to recruit investors. They advertise their platforms – often on social networking sites, various trading websites, message boards, and spam e-mail – with big promises of easy money, low risk, and superior customer service. Potential investors are also cold-called from boiler room operations, where high-pressure salespeople use banks of phones to make as many calls as possible to offer “once-in-a-lifetime” opportunities.
Don’t Let Them Mislead You – It’s All Smoke and Mirrors
Challenging binary options scams can be very complex and mistakes can cost you. Finance Watchdog analyzes your case and assists you throughout the entire recovery process.
In the first two decades of the 21st century the internet became Ground Zero for binary options scams and binary options fraud.
Perhaps what first drew you to their website was a pop-up ad. Or a social media post. You clicked and found an attractive, professional -looking presentation promising you:
- A quick, profitable return
- A huge immediate bonus just for joining
- An easy-to-manage online binary options platform
You signed up and soon their representatives contacted you. They introduced themselves as your “brokers.” And then you transferred funds, most likely using your Visa® or Mastercard.® Soon, you found yourself trading stocks or foreign currencies, indices and commodities. To help you out, your “broker” courteously provided personal coaching. And timely recommendations. (Real brokers cannot do that because it’s patently illegal).
While legitimate, government-regulated online brokerages do exist, there are many more unregulated firms – especially those offering binary options – whose operators based their business models on swindling unsuspecting and inexperienced investors over the internet.
It’s a Video Game
You assumed the unregulated firm’s state-of-the-art internet site would allow you to trade. Actually, it’s nothing more than a video game. The binary options platform it features does not follow obligatory trading rules and procedures. In fact, it’s not even plugged into a true market exchange. The gains you supposedly made and the losses you supposedly suffered, are all imaginary. Nothing more than smoke and mirrors intended to convince you it’s for real. Oh, and that bonus you supposedly received? It was just as imaginary as everything else.
What Happens with Your Money?
Unregulated brokers promise you that they deposit your money in a segregated bank account. They like to think that they will prove their integrity and convince you that they guarantee your access to your funds. However, no such personal account exists. That also is a fiction. Your money went straight into their own bank account instead.
Sure, they promised that you could withdraw your money whenever you want. But you will soon find out that’s easier said than done. Some firms will ignore your requests to access your funds outright. Others will bounce you back and forth between different departments in order to exasperate you. To the point when you’ll just give up. And then there are those that will point to the small print on the Terms & Conditions page. Squint your eyes and you will see that you agreed to first reach an unattainable amount of trades. Or repay that huge bonus they gave you before you even apply to withdraw your money. Or both.
A Binary Options Scam by Any Other Name Is Still a Scam
For about ten years, online binary options scams were ubiquitous. The damage they inflicted on consumers was enormous. In response, a growing number of countries banned binary options trading by retail investors. In 2018 the European Union (EU) enacted a temporary ban as well. It renewed that ban on an ongoing basis until July 1, 2019. By then the last online binary options site registered in the EU finally shut itself down. In addition, Google and Facebook ceased accepting ads linked to binary options sites. These actions, as welcome as they were, however, merely encouraged many operators of phony binary options sites to re-brand themselves. They now claim to be online forex brokerages and even private banking firms.
Beware. The terminology changed but the scam remains the same.
Cryptocurrency Investments Scams.
With the rise of bitcoin, “cryptocurrency” (or “crypto currency” or “altcoins”) suddenly became the latest hot item for investors worldwide. Scammers knew a good thing when they saw it. They weren’t far behind. They targeted cryptocurrency investments so thoroughly that many analysts now draw comparisons between digital currency and binary options scams.
Wikipedia defines cryptocurrency, as “a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies.”
The Big Difference
Unlike cash, governments do not issue cryptocurrencies. Unlike stocks and bonds, they do not regulate cryptocurrencies. What’s unique about crypto is that peer-run systems generate it. They employ encryption to ensure (varying degrees of) anonymity and security. Moreover, they design individual to gradually reach a maximum amount over a pre-set time period. Once that time period is up, generation will cease. It was that built-in deadline that encouraged a rush by investors.
As a result, the entire virtual currency market reached a capitalization of nearly $2 trillion dollars in just 12 years. Since Bitcoin was introduced in 2009, its value increased at one point by over 25,000 percent. Within five years from mid-2013, the complete market cap for all cryptocurrencies grew by a whopping 10,000 percent.
The Cambridge Centre for Alternative Finance issued the world’s first global cryptocurrency benchmark study in May 2017. It found that more than three million people worldwide were then actively using digital currencies. They used it as an alternative to acquire everything from goods and services, and to participate in gambling platforms known as “cryptocurrency lottos.” That figure was three-times higher than previous estimates. It proved that there was a critical mass that turned cryptocurrency investments into an integral part of the global financial system virtually overnight.
A number of other virtual currencies came onto the market following the advent of bitcoin. In the terminology of the trade, they underwent a cryptocurrency ICO (initial coin offering). These include Litecoin, introduced in 2011, and Ethereum, introduced in 2015.
Bitcoin alternatives like these, among many others, now attract attention from people interested in cryptocurrency investments. Especially if they are seeking to enter the market at a lower entry price. Within one year, therefore, bitcoin’s share of the market fell from 90 percent to 40 percent.
Cryptocurrency consultants are usually the first stop for new investors. The challenge for the investor is that cryptocurrencies are, by definition, free from government regulation. Therefore, there are no licenses for cryptocurrency consultants. To weed out the scammers, check to see if they have professional histories. Look for a background in finance, as investment consultants, stockbrokers, commodity traders, or some other related field that actually does require government registration. And then confirm that their licenses remain valid before you buy your crypto.
As is the case with traditional scams, fraudulent cryptocurrency consultants and fraudulent cryptocurrency trading sites generally disguise their addresses by renting out a mail drop in an unusual location for international commerce. That address usually turns out to be on some remote and underpopulated island. Or in a remote and underpopulated country behind what was once the Iron Curtain. Due to demographic factors, such countries usually lack the governmental infrastructure to effectively monitor brokerages and other financial services. Complementing that is lax enforcement of whatever legislation does exist. And a legal system that has no experience in cryptocurrency investments and prosecuting online scams.
How to Safely Make Cryptocurrency Investments
The next step to buying cryptocurrencies is to find an exchange. But the selection of an exchange for investing in cryptocurrencies poses unique risks. This is because even if a cryptocurrency exchange claims it is incorporated in a large Western country, it will not be registered with the national financial oversight agency. Again, that is because cryptocurrency is, by definition, free from government control and supervision.
Financial regulation is the most important aspect of a brokerage’s credibility. Without it there is no government oversight. Which means the brokerage is unregistered and unmonitored. This is typical of all scam brokerages. If the cryptocurrency exchange also trades other commodities, check with the appropriate national financial oversight agency that has a valid license to do so. In the event that it does, it has everything to lose if it is engaging in a cryptocurrency scam. If it doesn’t, that’s a red flag. Stay away.
Investors can trade cryptocurrency like any other asset. A full list of the costs of doing so should appear on an exchange’s website. If it does not, that’s also a red light. If the site intentionally hides its crypto trading costs from the public, that probably means they are either unnaturally high, linked to the size of the investment or even arbitrary − which, of course, enables the scammer to maximize the rip-off.
Virtually all of the world’s most respected financial regulators have issued general or specific cryptocurrency warnings for investors. Check what they recommend before investing.
Initial Coin Offerings (ICOs)
ICOs are highly speculative investments that are mostly unregulated, and many have turned out to be scams. If the ICO is issued by an overseas entity, it will be even harder to get your money back if it turns out to be a scam. Token values can fluctuate drastically and it’s possible for a computer hacker to steal them.
Before you decide to invest in an ICO, you’ll need to do a lot of research. Look for forums or websites that explain the product in detail and present a balanced perspective.
CSA Investor Alert: Caution Urged for Canadians Investing with Crypto-Asset Trading Platforms
Investors should be cautious when dealing with any crypto-asset trading platform because key investor protections may not be in place. These key investor protections include secure handling of client funds, appropriate safekeeping and protection of assets, confidentiality safeguards for personal information, reliable processes for pricing and trading in crypto assets, appropriate investor pre-trade disclosures, and measures against market manipulation and other harmful practices.
Advice: Initial Coin Offerings and Crypto-Assets
Although many crypto-assets may be available for trading on specialised trading platforms after issuance, their liquidity is typically shallow and investors may have a limited possibility of liquidating an investment. The information about the project and the issuer may also be limited considering that they are usually at a very early stage of development. Another issue has to do with the variety of crypto-assets issued and the different rights attached to them, which may not be easily understood by investors, and also the fact that there may be risks that are specific to their underlying technology as discussed below.
There have also been widespread reports and concerns around fraudulent ICOs, whereby crypto-assets either do not exist or issuer/developers disappear after the ICO. These could represent up to 80% of ICOs according to some sources.
Cryptocurrency investment scams
UK consumers are being increasingly targeted by cryptocurrency-related investment scams.
Cryptocurrencies (such as Bitcoin or Ether) themselves are not currently regulated in the UK. So the transfer, purchase and sale of cryptocurrencies, including the operation of a cryptocurrency exchange, all fall outside the regulatory remit of the Financial Conduct Authority (FCA).
However some types of cryptocurrency products may be or may involve regulated investments depending on their nature and how they are structured. For example, firms that sell regulated investments with an underlying cryptocurrency element may need to be authorised by the FCA to do so…
The firms operating the scams are usually based outside the UK but will claim to have a UK presence, often a prestigious City of London address.
Scam firms can manipulate software to distort prices and investment returns. They may scam people into buying non-existent cryptocurrencies. They are also known to suddenly close consumers’ online accounts and refuse to transfer the funds to them or ask for more money before the funds can be transferred.
Well-known names being used in cryptocurrency scams
Fraudulent websites claiming to offer cryptocurrency investments are using images and fabricating recommendations from prominent individuals such as Deborah Meaden from the BBC’s Dragons’ Den and Martin Lewis, the founder of MoneySavingExpert.com, without their consent.
The adverts are placed on social media and other websites and use images of these individuals to promote fraudulent cryptocurrency investments. Clicking on the advert takes you to the full article where their images are presented along with fake quotes recommending that you make investments with the fraudulent company in cryptocurrencies such as Bitcoin.
Alternatively, clicking on the advert will take you to a page where you are required to input your contact details. The suspect company will then phone you and persuade you to invest.
What to Know About Cryptocurrency
As more people get interested in cryptocurrency, scammers are finding more ways to use it. For example, scammers might offer investment and business “opportunities,” promising to double your investment or give you financial freedom.
Watch out for anyone who:
* guarantees that you’ll make money
* promises big payouts that will double your money in a short time
* promises free money in dollars or cryptocurrency
* makes claims about their company that are not clear