Crypto scams made up half of financial fraud in 2020 – FMA
Austria’s financial regulator the Financial Market Authority (FMA) has released some end-of-year results, indicating that 594 victims of financial fraud contacted the FMA in 2020 – an all-time high in what the regulator called an increasing trend over a period of several years.
The average loss sustained is around €42,000 per person.
Around 40% of victims of fraud were contacted by telephone – a practice known as “cold calling” – and were offered investments that apparently promised high returns during the course of the telephone call.
However an even larger number, around 60%, lost their money over the Internet – with “insider” tips and financial products promising large returns with a low risk attached being the most frequent bait.
Around half of all fraud methods are based on investments in crypto assets.
“Unfortunately, we have been observing an increase in investment-based fraud for a number of years. Financial fraudsters lure their victims into the trap with unrealistic promises, generally promising high returns with a low risk attached”, the FMA’s Executive Directors, Helmut Ettl and Eduard Müller warn, and also advise people to be cautious: “What appears too good to be true, is usually not true!”
The FMA said that it considers the prevailing low interest environment and digital transformation to be reasons for the strong increase in financial fraud. The number of victims has doubled compared to 2017: an ever increasing number of people are investing online in products that are apparently particularly lucrative.
The FMA’s Executive Directors added that effective prevention of consumers against losses as a result of investment fraud is also one of the FMA’s priorities for supervision in 2021.
The FMA advises people to check that the have all the necessary information about the product, as well as whether they understand it all, prior to making a decision to invest. In addition, they should check whether the provider is authorised by the FMA, or whether an investor warning has already been issued about the provider. Furthermore, the FMA has added a lot of information for consumers on its website about the issue of “Spotting financial fraudsters”, including a list of warning signs as well as examples of current scamming methods.