Seniors Bear Burden of Crypto Scams
Fraud is old and crypto is new, but together they lead to losses for older people

By Iván Cazarin

Con artists are increasingly turning to cryptocurrency in scams that target older people, accelerating the already surging elder fraud in the United States. Folks are misled into investing in a “fake” crypto schemes, befriended or romanced into sending crypto to swindlers, or tricked into paying in crypto to fix fake security breaches. No matter what scam, crypto is the irreversible and practically untraceable means of payment. Cryptocurrency’s role in elder fraud is exploding,  costing older people billions of dollars annually, emptying retirement funds, life savings and the ability to cover daily expenses or enjoy their retirement.

From 2021 to 2023, the number of internet crimes against seniors using crypto tripled according to the FBI and the financial losses jumped nearly seven-fold (from $241 thousand in 2021 to $1.65 billion in 2023).These figures are likely undercounts because the FBI estimates there are 44 unreported frauds for every official complaint, meaning there were likely 750,000 crimes against older people involving crypto in 2023. The AARP estimates that a third of financial exploitation of older people by strangers are unreported, meaning total crypto fraud losses for older people likely approached $2.5 billion.

Tech-support scams direct people to Bitcoin ATMs

Fraudsters frequently impersonate tech-support, financial institutions, or even law enforcement to entice victims to deposit cash into Bitcoin ATMs at gas stations or convenience stores to rectify the alleged computer breach, account problem, or identification theft. Pop-up ads direct older people to scammers who tell them that they must act immediately to protect their bank or computer account and discourage them from contacting authorities.

The Federal Trade Commission reported that frauds involving Bitcoin ATMs grew tenfold in the last three years to $110 million in 2023 and that people over 60 years old were three times more likely to be defrauded this way than younger people. A sampling of recently reported tech-support scams using Bitcoin ATMs include:

• A 73-year-old South Carolina woman lost $30,000 to a scammer that claimed to be her bank and told her to deposit money into a Bitcoin ATM to secure her funds, but the money was whisked away to the fraudster.
• A 76-year-old Indiana woman lost $31,500 to fraudsters that posed as representatives from Apple, her bank, and the government after she received a fake security alert on her iPad. Although she had never heard of Bitcoin, she followed instructions and made a Bitcoin ATM deposit in an effort to protect herself.
• A California retiree put $75,000 into a Bitcoin ATM after a computer pop-up alert led her to a fake customer service number with fake bank investigators and fake federal agents that claimed to be fixing a computer virus-spawned financial vulnerability

Scammers target older people in crypto investment scams

Swindlers target seniors online and trick them into emptying their retirement accounts, access the equity in their homes, or even borrow money to invest in fraudulent crypto schemes. The FBI reports that crypto investment scams targeting older adults were growing faster than any other age cohort and surged nearly four-fold in 2022 alone. Crypto investment scammers often begin by encouraging small crypto investments that the fraudsters pretend to have paid off before pushing for larger investments, often repeating the cycle several times to hook larger payoffs, a scam known as pig butchering.

In a September House Financial Services Committee’s Subcommittee hearing, Rep. Blaine Luetkemeyer (Missouri) explained that the scammers push the get-rich-quick crypto buzz, and “ use this promise to their advantage. But, unbeknownst to the victim, none of it is real. The crypto they purchase is not real, and the returns shown never existed.” Some of these scams can score big payoffs:

• An 80-year-old California woman lost $720,000 after she was contacted on a chat app and built a rapport with a scammer that encouraged her to download a crypto trading app. He cut off communications after she had invested her life savings over the course of only three weeks.
• A 74-year-old Californian found a crypto broker online and started made a $500 investment that doubled in value; the purported broker encouraged him to invest more and more until he had put in more than $340,000, but when he tried to withdraw funds from the fake investment account, he was told he needed to pony up more money, which is when he realized he had been ripped off and the crypto brokerage was fake.

Scammers target older people because they can be more trusting, less technologically savvy, and more socially isolated, which combine to make them especially vulnerable to deception from bad faith actors. Swindlers are turning increasingly to crypto to quickly rip off retirement savers across the country, frequently leaving older people with little or no chance of recovering their losses, their trust, and their dignity. This is what happens when you build an industry model that invites predation. It’s time for the Congress, federal and state regulators, and law enforcement to do what it takes to make crypto meet basic financial safeguards instead of giving a pass to the fastest growing fraud medium.

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