Scammers are using cryptocurrency to steal your money

By Crystal Baldwin 

Recently, three Vermonters reported losing just under $1 million in total to cryptocurrency scams.  Entire retirement accounts were drained, and because of early withdrawal penalties, thousands of dollars are due to the IRS.  Some owe family members for funds borrowed on the chance that cryptocurrency would substantially increase their investment. 

$80 Million Lost to Cryptocurrency Scams since late 2020 as reported by the Federal Trade Commission.
$80M Lost to cryptocurrency scams since October 2020 as reported by the Federal Trade Commission

As a peer-to-peer spending source, every type of scam could at any point use cryptocurrency as the preferred form of payment, over gift cards, wire transfers, and cash, for example.  According to the Federal Trade Commission, cryptocurrency scams have been increasing since 2017 and “skyrocketed” at the end of 2020 (ftc.gov). 

So, what is cryptocurrency? 
In very basic terms, it’s virtual money that uses its own currency, or monetary system.  When we usually think of currency, it’s affiliated with a specific country, has an exchange rate and is produced as banknotes and coins known as fiat currency.  The money in a U.S. bank account will note an amount in U.S. dollars, for example.  Cryptocurrency is usually unaffiliated with a particular country, maintaining its own exchange rate.  As such, cryptocurrency is not backed by any government or other central bank (ncsl.org) like we are used to with US banks which are FDIC insured—insurance that protects your money from bank failure. 

Cryptocurrency is...Risky digital currency recorded in an online public ledger called the "blockchain"

A peer-to-peer payment method

Stored in a digital wallet (software/app) accessible to users with a computer or a mobile device

Transferred as encrypted information (called public and private keys)

Not bound by geography nor backed by government or other central bank

Anonymous, like cash transactions

Taxed as any other income
Information by ncsl.org and finra.org

How is cryptocurrency used? 
To spend using cryptocurrency, a user needs a digital wallet accessible through software or an app and some funds to deposit to convert into cryptocurrency, such as Bitcoin.  There are many different cryptocurrencies, affiliated applications/websites.  Not all cryptocurrencies are the same and, unfortunately, some are entirely fake. 

When transferring, your funds are assigned a unique password that is required to move funds. As such, the transfer of funds happens instantly, with little federal oversight or regulation, making cryptocurrency the currency of choice for fraudsters. 

Cryptocurrency is the preferred payment method of scammers.   
Any type of scam can manifest with crypto being the scammer’s preferred mode of transfer.  Scammers like cryptocurrency, because, unlike with traditional bank transfers and transfers done by a money transmitter (like Western Union and Money Gram), there is no third-party banking institution involved in the transfer.  The transfer itself is peer-to-peer and performed with a unique encryption code (in simple terms, think of the best password you have ever set eyes on).  This means, if you have money in bitcoin and the receiving party receives your encryption code, now the receiving party has your money.  All cryptocurrency transactions that are completed on the blockchain are irreversible and funds cannot be recovered. 

Cryptocurrency scam alert: Ponzi schemes, investment scams and unlicensed sellers, stock scams, hackers and computer tech support scams
Be on the lookout for these cryptocurrency scams

The exchange of funds happens instantaneously, virtually and globally, making the jurisdiction of the monetary exchange difficult to determine.  Even if the receiver says they are in the U.S., you will not be able to verify this claim.  

Is Cryptocurrency an investment or a scam—an investment scam, or something else? 
According to the Securities and Exchange Commission (SEC), cryptocurrency is a “highly speculative investment” and the “Bitcoin futures market should be pursued only by mutual funds with appropriate strategies that support this type of investment” (sec.gov).  A speculative investment is one with a high degree of risk with hopeful long term gains. 

There are a number of fake and a number of honestly operating cryptocurrency investment firms. There remains little regulation in the field.  The SEC indicates, “While these digital assets and the technology behind them may present a new and efficient means for carrying out financial transactions, they also bring increased risk of fraud and manipulation because the markets for these assets are less regulated than traditional capital markets” (sec.gov).  The Financial Industry Regulatory Authority (FINRA) echoes that “The markets for cryptocurrencies remain highly volatile and risky.” To learn more about cryptocurrency markets and products, review the helpful resources on the FINRA website

More to consider: 
As an entirely digital currency, all access points are digital.  Individual accounts can be hacked and cryptocurrencies themselves are not foolproof.  When a cryptocurrency’s system is breached, millions of dollars are lost, as demonstrated in breaches; Bithumb lost $30 million, Coinrail lost $37.2 million, BitGrail lost $195 million, and Coincheck lost $534 million (investopedia.com).  

A person that opts to use cryptocurrency must ensure their account is protected and secure against the most determined hacker.  Even still, there are ways that scammers can obtain direct access to your digital accounts.  Through a convincing tech support scam, they claim there is a problem with your account that must be solved, and you sign them in, allowing them access to everything.  Another easy route is with a simple click of the mouse, the computer can be infected with viruses, opening the virtual door for your computer and accounts on it to be susceptible to scams.   

Without proper security, ensuring your systems will not be breached, one simple hack can risk your entire cryptocurrency account.  With this in mind, digital currency may not be the right choice for someone who sets easy passwords, performs few antivirus checks, or is a carefree web user.     

Report Scams: 
If you or someone you know have encountered a scam in Vermont, report it. Use CAP’s online scam reporting form.  

Help us stop these scams by sharing this information with those you care about. 

References: Finra.org, sec.gov, investopedia.com, ncsl.org, investor.gov. fdic.gov, ftc.gov

Vermont’s Top Ten Scams of 2020

Vermonters filed 5,021 scam reports with the Attorney General’s Consumer Assistance Program (CAP) in 2020. The Social Security number phishing scam, which typically involves calls claiming that your Social Security number has been compromised, suspended, or linked to criminal activity, remained the most commonly scam for the second year in a row with 1,160 reports filed. Claiming the number two spot on the list of top ten scams in 2020 were “free money” scams. Six-hundred-eighty-three Vermonters reported receiving “free money” scam calls where they were told that they had won a prize or money and needed to pay fees or taxes upfront to collect. With scam attempts remaining high, Attorney General T.J. Donovan urges Vermonters to Take it Slow: scammers will pressure you to act fast, demanding personal information and payment, while threatening extreme consequences if you do not comply. Don’t let them pressure you!

“If you get a suspicious call, remember to slow down, hang up the phone, and take notes on the interaction,” warned Attorney General Donovan. “If you still need help identifying if something is a scam, call us at CAP at 800-649-2424.”

Unfortunately, many scam encounters result in monetary loss in Vermont. In 2020, 249 Vermonters lost approximately $1.5 million, in total, to scammers. The most common scams associated with monetary loss were imposter scams (scammers posing as friends, family members, or romantic interests) and online classified listing scams (scams perpetrated on sites such as Craigslist or Facebook Marketplace). Scammers ask their victims to send money using a variety of methods, including gift card transactions, peer-to-peer payments apps like Venmo or CashApp, wire transfers, and cash or checks in the mail.

Vermonters can report a scam or sign up for the Scam Alert system by going to ago.vermont.gov/cap or by calling the Consumer Assistance Program at 1-800-649-2424. 

The top 10 scams of 2020 are

  1. Social Security number phishing 
  1. Free money 
  1. Amazon and package deliveries phishing 
  1. Computer tech support 
  1. Phony relationships (not grandchild) 
  1. Debt collection  
  1. Online classified listings 
  1. Extortion emails 
  1. Grandchild imposter 
  1. Bank/financial institution phishing 
Vermont’s Top Ten Scams of 2020 by the Consumer Assistance Program of the Vermont Attorney General’s Office and the University of Vermont
  1. Social Security number phishing 

The scam: You receive a phone call (usually a robocall) stating that there has been criminal or fraudulent activity involving your Social Security number. The scammer may also claim to be a government agency or law enforcement, threatening arrest or serious consequences. The scam often begins as a robocall. 

How to spot the scam: If Social Security (or any official agency) wanted to contact you, they would not call to ask for your personal information, especially your Social Security number, over the phone. These agencies mail communications and would never threaten you for information or payment over the phone. 

What to do: Be wary when responding to unsolicited contacts and never provide personal information to unknown contactors, especially over the phone.  

  1. Free money 

The scam: You receive a phone call, email, or mailing that claims you have won money or a prize—but there’s a catch: you have to pay money up front for taxes or fees. Sometimes the outreach includes a realistic-looking fake check. The check bounces and no “winnings” are ever dispersed. Often, they claim to be Publishers Clearing House. Scammers may also claim to offer government grants or stimulus money, getting touch via social media. 

How to spot the scam: If you actually win a major prize from Publishers Clearing House, they will contact you in person. For smaller prizes (less than $10,000), winners are notified by overnight delivery services (FedEx, UPS), certified mail, or email in the case on online giveaways. They never make phone calls. An unsolicited check in the mail from an unknown sender is usually a scam. 

What to do: If it sounds too good be true, then it’s not true. Never pay an upfront fee to receive winnings or a grant. If you win something, they will pay you – not the other way around. No actual contest or sweepstakes would you make you pay first to receive money. 

  1. Amazon and package deliveries phishing 

The scam:  An automated phone call or email claiming that your credit card has been charged by Amazon or that you have an outstanding balance on your account. The scammer instructs people to call them to get a refund or resolve the charge, at which point they request your card number and attempt to gain remote access to your computer. You might also receive a text message or email claiming that you have a package, but they need to verify your information. 

How to spot the scam: Amazon will not call you unless you request that they do so. If you have legitimate concerns about your Amazon account, or other accounts, contact the company directly through a trusted contact, such as through the customer portal within your account. 

What to do: Hang up the phone and do not call back. Furthermore, you should not allow remote access to your computer to unknown parties. If you are concerned about charges made to your credit card, contact your credit card company directly. If you receive a text regarding a package delivery, don’t click any links or reply.  

  1. Computer tech support 

The scam: A phone call or pop-up message on your computer claiming to be from Microsoft, Apple, or another well-known tech company. They will say there is a virus or other problem with your computer and try to persuade you to give them remote access to resolve the issue. They may also ask for immediate payment for their services. 

How to spot the scam: Legitimate customer service information usually won’t display as a pop-up. Companies like Microsoft, Apple, and Google do not call you to notify you of malware on your computer. 

What to do: Never provide remote access to your computer to a stranger or click links from an unknown sender in an e-mail or pop-up message. If you get a call from “tech support,” hang up. Also, be careful when searching for tech support numbers online. Some users have been scammed by calling illegitimate numbers for legitimate companies. 

  1. Phony relationships 

The scam: There is a wide variety of phony relationship scams. Sometimes, the scammer pretends to be someone you know, like a love interest, friend, relative, or even a religious leader. They typically reach out to you online or on the phone, claiming to need money.  

How to spot the scam: They ask you to send money immediately, often in the form of wire transfers or gift cards. If you met the person online, but they refuse to video-chat or talk on the phone.  

What to do: If they claim to be someone you know, call the person using a verified phone number. If you receive a suspicious email, be sure to double-check the email address. If you’re feeling suspicious, get the real story and talk to someone you trust. Cut off communication with the scammer. If you receive an email from a friend or coworker asking for money, do not send money. Be sure to call that person directly—it’s most likely a scam. 

  1. Debt collection 

The scam: Scammers pose as debt collectors or law enforcement and say legal action will be taken against you if you don’t pay them what you owe. Some may claim to be familiar businesses or the government, such as utility companies or the IRS. 

How to spot the scam: If you did owe a debt, collectors are not allowed to threaten you with arrest over the phone. You can request verification of the debt, which has to be sent to you in writing. If you ask them to stop calling you, they are generally required to stop. 

What to do: Hang up the phone, and if they call again, let the call go to voicemail. If you think you do actually owe money to a debt collector or other agency, make sure you call using a trusted number. 

  1. Online classified listings 

The scam: Sometimes the scammer responds to a seller’s post, overpays with a check, and asks for the remainder to be wired back. Sometimes the post is for a fictitious rental property and the scammer is looking for the deposit and first month’s rent to be sent immediately. Scams even happen when you are looking for that perfect puppy or pet to expand your family, but the transport of the animal is supposedly held up at the airport or elsewhere. 

How to spot the scam: If you feel suspicious, stop the sale or purchase. The scammer may ask you to wire them money, send a bank transfer, or pay using gift cards. They may not want to talk on the phone or meet in person. Remember, you should not provide a rental deposit before signing the lease or contract in-person. 

What to do: Complete your transactions in cash and preferably in-person. If they refuse to meet in-person or talk on the phone, ignore them and end communication. 

  1. Extortion emails 

The scam: You receive an email that threatens exposure of compromising home video and pictures, unless you pay, usually in Bitcoin. The email claims you have been hacked and may reference a current or former password you may have used. The sender claims that they have access to your computer and webcam and threatens to release embarrassing photos and video unless you send them money. 

How to spot the scam: The scammer is using scare tactics to make you act fast. Don’t take the bait! The email message will often include threats and hurtful language. 

What to do: Do not reply to the email or click on any links or attachments included on the message. Do not send money. If you find that your current password is listed in the email, change your passwords from another computer and run virus scans. Delete the email or add it to your spam/junk folder. 

  1. Grandchild imposter 

The scam: Scammers pose as grandchildren and claim to be in serious trouble, such as in prison or at the hospital. They urgently request money in the form of wired funds or prepaid gift cards. They may also claim that their voice sounds unfamiliar due to injury. After the initial call, they may claim you will be hearing from an attorney or officer. 

How to spot the scam: Call your grandchild or family members on known phone numbers to ensure your grandchild is safe. 

What to do: Never wire or otherwise send funds unless you can verify the emergency. Take it slow and contact someone you trust.  

  1. Bank/financial institution phishing 

The scam: You receive an email or phone call claiming to be from a bank. Emails might claim that your account is in danger or has been suspended, or that your card is on hold due to suspicion activity. The email also includes links to phony websites. Phone calls may claim that there has been fraudulent activity involving your account, and the scammers demand personal information about you and your account.  

How to spot the scam: Scammers mask their actual identity by changing the sender name to the name of the financial institution. Look at the email address before opening the email. You will often find an account not affiliated with your bank. Similarly, scammers can spoof phone numbers of financial institutions. If you answer a call that appears to be from your bank and they ask for your personal and/or account information, hang up and call your bank directly on a number you trust to verify their attempt to contact you.  

What to do: Do not reply to the email or click on any links or attachments included on the message. If you receive a call, hang up the phone. To correspond directly with your bank or financial institution, use verified contact information, such as information listed on your statement. 

Don't Get Scammed: Slow Down and Follow A Plan: Slow Down, Log the Call, make One Call to a primary contact, report to Who Cares; CAP cares, call 800-649-2424.
Don’t get scammed, slow down and follow a plan. SLOW method by the Consumer Assistance Program.

Internet Scams to Avoid

By Crystal Baldwin 

This time last year, I had no idea my whole life would be online—work, exercise, shopping excursions, and more.  Now that pretty much every facet of my life, and likely yours too, involves the internet, we must be on the lookout for new and developing scams to prevent ourselves and our friends and loved ones from being scammed.   

Common scam signs are unverified requests for personal information and money, whether requested through gift card, wire transfer, cash, peer-to-peer payment, postal money order, or check. 

The following are some anticipated internet scams to avoid: 
 
CEO/boss and business/organization personnel imposter scams:  Business personnel working remotely, in distracting environments and away from regular exchange with colleagues, may receive urgent messages from someone purporting to be their boss or colleague ordering funds to be transferred. 

  • Spot the Scam:  Scammers create an email address like your colleague’s and assign the name of the email account holder to be the person’s name. 
  • How they trick us:  It is easy to miss that the details of the email address have changed, particularly when operating on mobile devices, which often only display the email sender’s name.  
  • Scam Prevention:  In business operations, put into place verification checks.  Ensure one check includes verifying requests directly with the sender through a phone call or video chat.  Also, require a third party to be involved, such as another colleague

Job and work-at-home offers and business opportunity scams:  These involve enticing offers to make a lot of money in exchange for performing simple tasks and transmitting money.  

  • Spot the Scam:  Commonalities among all such scams offer work that is too good to be true, ask for payment or your personal information at some point, and refuse to communicate with you by video chat on your terms. 
  • How they trick us:  These scams can hide in plain sight, often posting in known online listings, like LinkedIn and Indeed, and even post listings under known business names.
  • Scam Prevention:  Standard application and onboarding procedures apply to home-based jobs as onsite positions:  You never provide your personal information up front. You never have to give money to your employer.  For business opportunities, the FTC prohibits the exchange of payment prior to the issuance of very specific disclosures.  

Friend-in-need and fake crowdfunding scams:  We have heard reports of Vermonters responding to emailed and messaged requests for help for various needs, such as to support missions and charitable causes, some scammers even claim to be the pastor of a congregation.  The scam pulls us in as we strive for connection and community through this time of isolation. We want to be helpful but can’t volunteer in the personal ways we used. 

  • Spot the Scam:  The message comes as a surprise and you can’t reach your friend through other methods, such as by phone, except the digital way in which you received the message.   
  • How they trick us:  We are convinced that the communication is actually coming from our friend and we do not know that their account was likely hacked or a fake account was created to solicit you.  
  • Scam Prevention:  Take steps to verify, even if the solicitor requests you not to tell others. A phone call to the person directly or another who is aware of the person’s whereabouts is key here.   

Fake news and affiliated endorsement of cure-all products:  Scammers will take advantage of consumers accessing news online and claim to have exclusive cures and vaccines.    

  • Spot the Scam:  The news popped up in a social media feed, in an email, or in a news alert with a media name you did not recognize. The information is not verified in other reputable news sources, or through a known health organization.   
  • How they trick us:  The alerts and ads use compelling stories and scare tactics that trigger us to respond emotionally, rather than rationally, to false promises.   
  • Scam Prevention:  Regularly check-in with trusted websites, such as the CDC and Vermont Department of Health for updates on the status of the virus and how it is being treated.  

Fake charities:  As is common with disaster and crisis scams, consumers can expect fake charity scams to prey on their generosity to help others in need.  They will most definitely occur online but may also occur by phone.      

  • Spot the Scam:  Unsolicited requests for donations by a charity you have never heard of and cannot verify.   
  • How they trick us:  They take advantage of our desire to help others and the sense of urgency to respond.   
  • Scam Prevention:  Verify the charity by using websites like Charity Navigator and the BBB’s Giving Wise Alliance.  Always request solicitations in written form to give you time to do your research and consider the ask. Give to known charities and assign designation to specific causes. 

This is not a comprehensive list of the scams that may be encountered online.  New scams will develop, and when they do, we ask that you share the information with your community as well as with the Consumer Assistance Program at ago.cap@vermont.gov . 

Help us stop these scams by sharing this information with those you care about. Get notified about the latest scams: Sign up for VT Scam Alert System alerts. 

Beware of the Electricity Cut Off Scam

By Crystal Baldwin and Sara Spencer

“Your electricity will be shut off, if you don’t pay.” 

Imagine receiving this message in the middle of your work day while relying on electricity to serve your customers.  Or, maybe the message comes into your home while every single person is using an electronic device for work or school.  The message can be quite alarming, and can cause a person to react on the spot to resolve the perceived problem.  Resist the urge to respond—hang up the phone instead.  

These calls are from scammers claiming to be your utility provider.  They demand payment by gift card, wire transfer, credit/debit cards, peer-to-peer payment, and sometimes even cash.  If you don’t pay right away, they threaten that your electricity will be turned off.  

Utility Disconnection Scam Alert graphic. Hang up the phone. Call your utility company directly. Legitimate companies will not demand payment by gift card or wire transfer. Contact CAP if you've been targeted at (800) 649-2424.

If you are contacted by one of these scams: 

  1. Hang up! Do not engage with the scammer and do not call them back.  
  1. Do not provide any personal information 
  1. If you are concerned about disconnection, call your utility provider. 

Help us stop these scams by sharing this information with those you care about.  Get notified about the latest scams: Sign up for VT Scam Alert System alerts.      

Call the Consumer Assistance Program at 800-649-2424 if you have questions, concerns, or need help determining if you have been a victim of a scam. 

When you receive one of these jarring calls, here is what you can do:

Take steps to verify by remembering SLOW: 

SSlow down.  The scammers urge you to act urgently. Don’t.

LLog the call.  For your assurance, write down the phone number of the caller and hang up.

OOne call. Make a verification call to the business, using a number you know and trust.

WWho cares? Call another person in your life who cares about you. Know that you can call CAP at 1-800-649-2424.  We care and can help identify scams.

Before this scam happens to you, you can take steps now to create a scam action plan.  Keep the SLOW reminder near your phone. Act now to prevent future loss.

The Awful COVID-19 Hardship Benefits and Compensation Scam

Today, our office issued a scam alert to warn about a scam that monopolizes on our COVID-19 hardship.  The email claims that the Vermont Department of Labor has recognized the difficulty the pandemic has caused and will pay $3750 starting today.  All that is needed is identity verification. What Vermont family couldn’t use this extra help?  Especially while many Vermonters enter the holiday season. 

According to a recent UVM study, 1 in 3 Vermonters are food insecure (Niles, et al. UVM).  You and I may have guessed that.  The lines at food drives and food shelves have gotten longer, not shorter.  The Everyone Eats program is overloaded with participant families.  Vermonters are hungry, in search of hope, and then in comes this email promising prosperity and money.  It is despicable.   

Just think what you could do with that money.  You could buy a traditional Thanksgiving meal at the grocery store, like you always used to. You could ensure your family is well fed over holiday breaks.  You could give your children a winter season worth remembering.   

Unfortunately, with this scam and all phishing scams, the scam keeps going once the information has been provided to the scammer.  Accounts are opened in your name without your knowledge or consent.  The scammers could even use the information they have gathered to apply for unemployment insurance benefits in your name.          

Screen capture of scam email claiming COVID-19 benefits and compensation will be issued.

The fact that a scam outfit would capitalize on the pandemic is inconceivable.  Let’s teach these scammers a lesson.  The more who know about this scam, the less will respond.  Share this information with your community and others you care about.  When you share, be sure to let others know if they receive one of these notices: 

  • Move scam emails to your junk folder.
  • Block text messages.
  • Do NOT click on any links or attachments.
  • Do NOT respond and do NOT send money.

Call the Consumer Assistance Program at 800-649-2424 if you have questions, concerns, or need help determining if you have been a victim of a scam.  Learn more about the scam and report it to the Vermont Department of Labor:  https://labor.vermont.gov/news/ui-fraud-alert-active-phishing-attempt  

If you have basic needs that are not being met, such as access to food, warmth, and shelter, connect with your local Community Action Agency and 211.  They can help connect you to resources and assistance in your community.