Losses due to binary options, cryptocurrency scams grow in 2017, Australian consumer body warns

Maria Nikolova

The average loss reported in binary options scams increased by 24% – from $32,744 to $43,085, which suggests that these scams became more effective at extracting large sums of money from victims.

The Australian Competition and Consumer Commission (ACCC) has earlier today posted its annual report on scams activity in Australia for 2017.

Certain types of investment fraud continue to attack Australian investors. Binary options scams appear to have peaked in 2016 and reduced in number of reports and in reported losses in 2017, the ACCC report indicates. Despite this, the average loss reported in binary options scams increased by 24% – from $32,744 to $43,085, which suggests that while there were fewer of them, these scams became more effective at extracting large sums of money from victims. While binary options are not illegal in Australia, there are a number of very professional looking websites usually operated from overseas offering binary options investments that are outright scams.

Another type of investment scam that gained popularity in 2017 involved cryptocurrencies, the ACCC warns.

In the fourth quarter of 2017, the value and popularity of cryptocurrencies increased worldwide, so scammers adapted and found ways to exploit popular trends, new platforms, new ways of communicating, fad products, changes to legislation and new investment opportunities. Between January and September 2017, about $100,000 was reported lost per month to scams which related to cryptocurrencies. However, in the month of December 2017, reported losses to Scamwatch exceeded $700,000 and the average reported loss had jumped from $1,885 in January to $13,205.

As the value of actual cryptocurrencies increased, so too did the scam losses in what people thought were real investments. By the end of the year, reports of losses related to cryptocurrencies exceeded $2.1 million but as with other scams, this is likely the very tip of the iceberg.

The list of cryptocurrency scams in 2017 includes fake ‘initial coin offerings’, and pyramid schemes. Not all cryptocurrency-related scams involved victims attempting to invest in stocks or initial coin offerings. Many scammers ask for payment through cryptocurrencies for a variety of scams because it is easier to remain anonymous while receiving payment. Ransomware scammers for example, commonly ask for payment through Bitcoin.

In 2017, the ACCC, Australian Cybercrime Online Reporting Network (ACORN) and other government organisations such as the Australian Taxation Office received more than 200,000 scam reports with reported losses exceeding $340 million, an increase of $40 million over 2016 losses.

The ACCC received over 161,500 scam reports with $90.9 million in financial losses which represents an eight per cent increase in reported losses over 2016. Losses to investment scams reported to ACORN and the ACCC exceeded $64 million in 2017. Investment scam losses reported to the ACCC increased from $23.6 million in 2016 to $31.3 million in 2017, marking a 33% increase. Analysis of investment scam reports did not reveal any particularly new techniques used by investment scammers suggesting the same tricks used in previous years remain effective. More high-value losses to investment scams were also reported to the ACCC in 2017.

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