Yotam Dar, expert on DeFi scams, weighs in on why scams are on the rise through money remittance operations.
It’s tragic, many people do not take their online security seriously enough until they are the victims of fraud. Unfortunately, scams have been rising at a remarkable rate, so many more people have been burned across the globe.
Take for instance in the United States, there were a record 2.2 million cases of fraud in 2021. The rise was even more dramatic in the United Kingdom where online crime increased by 47%. These numbers are alarming, and it’s important to understand what’s driving these trends, as greater awareness is part of the puzzle in keeping the online world safe for everyone.
Money remittance operations scams are a particularly common way for fraudsters to attempt to steal people’s hard-earned money. At a high level, this is any transfer of money, but in practice, it refers to transfers across countries. Popular scams include dating schemes, lottery schemes, and shopping schemes. The fraudsters will prey on the most vulnerable and ask them to transfer money under false pretenses.
These schemes have been around since the dawn of the internet, but here’s why they are on the rise.
The elephant in the room
The pandemic era restrictions have caused a major shift away from bricks and mortar toward online services. Many people who were previously resistant to paying for products online have now been forced to because they have no other option. What this means is the least tech-savvy people all started spending money online at the same time. This created a window of opportunity for fraudsters to exploit.
Part of the rise in online crime is a function of how much more time and money we are spending online. Logically, offline crime decreased in the same time period in many countries. It’s all about opportunism. Yet we are all aware of how to protect our valuables in the real world, but many people aren’t as clued-up in the online space.
The pandemic itself was a major avenue for scams, as people with malintent used the panic to their financial advantage. Sally Greenberg, executive director of the National Consumers League, revealed, “We see so much fraud related to COVID-19 because people need answers, aren’t thinking straight, and are somewhat confused.”
As people turn to online sources of truth rather than their in-person professionals, fraud becomes easier.
Fraudsters have better tools
In essence, any money remittance scam is a betrayal of confidence. Fraudsters will work hard to convince their targets that they are a legitimate person or organization with noble intentions.
In some cases, this is as simple as replicating a brand people already know and trust and at other times it’s much more complex where an entire online persona across social media platforms is created. This kind of activity used to be far more time-consuming, but now there are so many tools and scripts out there that speed up this process.
Another important factor is the use of blockchain technology and cryptocurrency. This allows the people conducting the scams to be completely anonymous and even though the transaction itself is traceable. A key part of this process is that it’s impossible to reverse a transfer of cryptocurrency, as it is by nature immutable. With traditional bank transfers, it’s possible, though difficult, for the bank to recall the money if it is flagged. With cryptocurrency, there are no safeguards at all.
Lack of financial literacy
The general lack of financial literacy in the wider population compounds both of the previous issues. If people understood the dangers of immutable transactions, they might be much more cautious than they would be otherwise. Yet often it takes learning the lesson the hard way.
Blockchain technology is still understood poorly by the average person and not nearly as mainstream as bull investors might have you believe. Anil Dash, the creator of the first proto-NFT, gives a reality check of comparing blockchain and the web. At the same time, post-invention, the web already had half a billion users and the blockchain is nowhere near this. Overwhelmingly, it’s only being used in trading apps rather than common apps most people have on their phones.
With inflation expected to hit new heights in 2022 because of cost-push pressures from rising energy prices and wages, people will be seeking super normal returns in less traditional ways. Many will attempt to turn their hand to cryptocurrency before fully understanding it, and this creates a gap that can be ruthlessly exploited by fraudsters.
What you can do to protect yourself
If you are concerned, you are right to be. There is a world of rapid innovation out there, and criminals are doing their best to use it to their advantage as much as they can. Yet, there are steps you can take to not make yourself an easy target.
You should implement these safeguards as soon as you can:
- Never share confidential information like bank account details through unsecured channels. No legitimate organization will ever ask you for your full password at one time. If someone does, it should be an immediate red flag.
- Never transfer money to someone who you don’t know or cannot verify. Look up the organizations you deal with and make sure they have a presence on credible websites. If they seem to have a large social following, check their comments and see whether it looks like real followers or bots.
- If you think a message is from a genuine organization, always go through their official website/Google rather than clicking an unexpected link sent by them. In the event they have sent you a message, it should almost always be available when you log into your account. It’s highly unlikely that they will email you with the content not being visible in your user portal.
- Regularly update passwords to keep them secure. A good rule of thumb is to update your password every three months, and make sure you use a password manager with a highly secure password.
- Use two-factor authentication wherever possible. It’s much harder for a hacker to break into your account if they need the result of a text message from your phone. If someone asks for this verification code, abort the transaction immediately if in any doubt.
Money remittance operations scams are rising fast, but you do not need to be a victim. Stay alert and warn your friends and family too. We can make the web safer together.