New research has revealed that cryptocurrency is responsible for more than a quarter (25.33%) of all scam enquiries in the UK.
The study from BrokerChooser analysed ONS and FCA data for investment-related scams and fraud to discover the causes of the problem in the UK and how much these complaints are increasing year on year.
Top five types of scam enquiry in the UK
|Rank||Category||Reports to ScamSmart (Apr 20 – Mar 21)||Percentage of Total|
|1||Cryptocurrency (e.g. bitcoin)||5,512||25.33%|
|3||Pension transfer to a new scheme||2,610||11.99%|
With 5,512 reports to the ScamSmart website in one year, cryptocurrencies received by far the most reports of any financial product, accounting for 25.33% of the year’s total. This indicates that investing in cryptocurrency carries the additional risk of a high number of scammers, in addition to the risk of a volatile and often unpredictable market.
Annual increase in scam enquiries in the UK
|Year||Total FCA scam enquiries||Percentage change|
In 2020, the total number of scam enquiries was 24,689 after a 55.04% increase from 2019’s figures, which is more than double the number of reports just 3 years prior. This huge increase in reports shows that scam enquiries have been growing at an exponential rate.
The study also found that most common method of scammers to make contact with you in the UK is online, accounting for 26.56% of incidents. There are many ways you can be scammed online, including websites for non-existent investment opportunities or clones of reputable trading websites that catch users out with their disguise.
London was found as the area with the biggest online fraud problem, with 73,463 offences in 2021. Followed by the West Midlands and Greater Manchester. Over in the U.S. California is the state with the biggest fraud problem with 3,153 victims in 2021. The state with the highest average losses was Oklahoma with average losses per incident reaching $214,639 in 2021.
In Australia, New South Wales has by far the largest number of investment fraud victims of any Australian state of territory, recording 2,870 victims in 2021 alone. The territory also saw one of the largest increases in fraud with a 143% jump from 2019-2021.
With crypto the most common type of fraud in the UK, the experts at BrokerChooser included their tips for avoiding these scams:
1. Verify credentials
Be critical about what you see online, social media can be misleading so it is important that you do your research and verify the legitimacy of the investment yourself. You should be weary of platforms or influencers and celebrities offering huge returns. If it seems too good to be true, it probably is.
2. Don’t rush, don’t FOMO in a project
There can be a huge pressure, especially in the crypto community, to jump on opportunities as quickly as possible, but you should always take your time to do research. Never feel obligated to invest in something because it’s what everyone else is doing. If all of a sudden an influential person starts hyping up a new token there is a good chance it’s a scam.
3. Do your homework and check as many details as possible
Learn to spot the red flags of investment fraud. Make sure you are watching the market, get clued up on the information that is being put out there and validate it through a number of sources, such as a whitepaper or a website of the new crypto project. Lacking a website or whitepaper are red flags.
It’s also worth checking the market cap of a crypto project, if it increases steadily or rapidly. The rapid jumps can also be warning signs. If you are able to dig into technical details, you can find information on chain explorers, like volume on that chain.