The Federal Bureau of Investigation recently reported that investment scams have become the most commonly reported and financially destructive form of online crime, accounting for $3.3 billion in reported losses in 2022. Cryptocurrency scams accounted for vast majority (75%) of these schemes, causing unprecedented increases in the number of victims and their dollar losses, according to the FBI.
Reports of online investment fraud have increased exponentially in recent years, mostly due to crypto schemes. (Source: FBI 2022 Internet Crime Report)
These figures — released with the 2022 Internet Crime Report — may seem stunning at first glance. Yet they fail to convey the truly massive global scale of the problem. The tallied losses only include victims who filed formal complaints with the Internet Crime Complaint Center (IC3). This is just a sample, a small fraction, of all such fraud victims.
The FBI reports:
Online investment fraud complaints more than doubled, increasing from $1.45 billion in 2021 to $3.31 billion in 2022.
Cryptocurrency investment fraud complaints, in particular, nearly tripled, increasing from $907 million in 2021 to $2.57 billion in 2022.
Online investment fraud is a multi-billion-dollar drain on the economy, involving transfer of extraordinary wealth to criminal syndicates overseas. The international nature of these schemes frequently frustrates any response by local police, while the dollar amounts of individual losses (except those exceeding six figures) rarely meet the threshold for intervention by federal law enforcement.
These schemes include crypto-romance frauds, advance fee scams, pump-and-dump and Ponzi schemes. Elderly, isolated and socially vulnerable persons are frequently targeted.
Older Victims Targeted
Online fraud losses among seniors (aged 60+) are far higher than any other age group.
Every day, Hudson Intelligence is contacted by victims of online investment frauds and cryptocurrency schemes. Many have lost their life savings. Some persuaded family and friends to participate, sharing promises of easy profits that led to ruin. Others cashed-out their retirement savings without recognizing the risks (or the tax liabilities). Among the hardest-hit are those who were persuaded to maximize their investments by taking large personal loans or remortgaging their homes, leaving crippling debts after the money — and the fraudsters — disappear.
About the Author: John Powers, CFE, CTCE is president of Hudson Intelligence, an investigation agency specializing in complex fraud investigations and international asset tracing.
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