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FRAUD ALERT - Cryptocurrency scams: Don’t be scammed twice

Cell phone showing incoming call from unknown caller

If you were recently targeted by or lost money to a cryptocurrency scam, be aware you are at a greater risk of being a target for a recovery pitch scam - also known as a double dip scam.

How the Double Dip works

Scammers may target you if you previously participated in or lost money to a crypto scam. They will claim they will be able to recover all or some of your lost funds. Or they may pitch a new investment opportunity, saying you can recover your previous losses. Sometimes the caller is the person who scammed you, but is disguised behind a new service, product or offering.  Or, they may say they are members of law enforcement or other type of authority to gain your trust.

Scammers often use victim lists   

Consumers or investors who have previously lost money or had their personal information compromised in a scam may have their names placed on what are known as “victim’s lists.” These lists can be sold or shared, resulting in these consumers and investors being targeted a second time.

These scam artists then contact the victims on the list in the hopes these individuals can be conned into yet another fake investment. 

Scammers using social media to gather contacts

More recently, scammers are using online High Yield Investment Programs (HYIPs) as an easy way to get the contact information of people who have already lost money to a scam. HYIPs are a kind of Ponzi scheme, which typically rely  heavily on recruitment of new investors. Money from new investors is used to pay returns to early investors until eventually, the scheme collapses when it runs out of money. 

With online HYIPs and the use of social media to promote these scams, con artists can get all sorts of personal information about the investor, create fake company profiles and account statements, persuade people to recruit new investors on their behalf and take advantage of the hype around cryptocurrency. They monitor it closely, continuing the scam until it reaches a tipping point: the amount of new investment money dwindles or the authorities are moving in. When this occurs, the HYIP perpetrators then execute their exit scam. They shut down their social media accounts, deactivate their websites, cease client withdrawals and disappear with the holdings of unsuspecting investors.

Then comes the recovery pitch when scammers track down the investors in a failed HYIP using personal information they collected, social media, or friends and family who were also lured into the scheme. 

How to recognize the Double Dip Scam:

  • Being contacted out of the blue – ask the question, who is the person calling? How did they get my contact information? We frequently tell our children not to talk to strangers; the same goes for unsolicited contact.
  • Being contacted by a friend who is being pitched with the recovery scam. You may have both lost money in a HYIP scam and now the friend is inadvertently luring you into a recovery scam to recoup your lost money.
  • Promises or guarantees that sound too good to be true – ask the question, does this sound like something legitimate, or is this another unrealistic promise?  Remember – there is no such thing as a guaranteed no risk investment.  Further, cryptocurrencies are very volatile.  Their value can change quickly and often.  Guaranteed returns when buying cryptocurrency is particularly unrealistic.
  • Being pressured to act quickly – ask the question, have I had time to think this through? Regardless of what promises they make to try to entice you, it’s always best to take the time to ask questions, and make sure you understand what you are agreeing to.
  • Being asked to pay money upfront for the “recovery services.” In addition to the original money you lost, you may lose more money in this second scam. 

What to do if you receive a Double Dip scam call:

  • Disregard the call or message. Hang up, delete or block the sender.
  • Do not provide personal information, credit card numbers or other financial information to the scammer.

Where to report the Double Dip scam:

Report the scam to the Canadian Anti-Fraud Centre and to FCNB.

Learn more about how to report fraud and where to report fraud.

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