Scamming to fix a scam: Beware of Crypto “refund and recovery” companies

Last Updated: March 25, 2024By Tags: , , , , ,

When it comes to cryptocurrency, it’s a Wild Wild West of opportunities, and many of those “opportunities” are nefarious in nature. Enter the “refund and recovery” fraudster companies who offer to recover money you’ve lost in a cryptocurrency scam (or other scam, for that matter). Oftentimes the ones who initially scammed you are the same scumbags who pretend to be the company that can retrieve your money for you. Quite a set-up, right? You end up losing money at both ends: the original scam and the “recovery” fees that never produce those stolen funds.

Refund and recovery scams vary in scope and schemes, but the end result is always the same — to phish for personal and banking data in order to drain your bank accounts. Here is a breakdown of how these scams work:

Whether it’s a refund scam promising to get your money back or a recovery scam claiming to get you the prize or products you were promised, the scheme usually follows a set pattern. Here’s how it happens:

• You’ve already been scammed. You may have given money to a phony charity, paid for a fake prize, or lost money to one of the many other ways scammers try to cheat you.
• Your name is on what scammers call a “sucker list.” Scammers keep and sell lists with information about people who have already lost money to fraud. It can include your name, address, phone number, the kind of scam that tricked you, and how much money you paid. Scammers buy, sell, and trade these lists, expecting that people who have been scammed once are good targets for being scammed again.
• Scammers come calling — again. Using a list of people who’ve already paid money to a scam, the scammer contacts you by phone, mail, or online. The pitch this time is that they’ll get back the money you lost or the prize or merchandise you never got. If you didn’t know you were scammed, no problem. The scammer, using the information they bought, can “helpfully” tell you about the earlier fraud. The information helps the scammer sound credible.
• They make you think you can trust them. The scammers may say they’re with a government agency, a consumer advocacy group, a law firm, a charity, or some other organization. Some even say they’re with the fake company that took your money, and they’re offering refunds to dissatisfied customers. They may say they’re holding money for you, offer to file complaint paperwork with government agencies on your behalf, or claim they can get your name at the top of a list for reimbursement. Whatever they say, it’s a lie, designed to gain your trust — and your money.
• You’re told you need to pay. The scammers promise to recover your money or merchandise, but they need you to pay them or give them financial information first. They may call the upfront money a “retainer fee,” “processing fee,” “administrative charge,” “tax,” “shipment and handling charge,” or even a “donation” to a charity they name. Or, they may say they need your checking, debit, or another financial account number so they can deposit a refund directly into your account. If you give them the requested fee or account information, your money will disappear.

Since cryptocurrency values and “opportunities” may be a bit confusing for many, the real lucrative opportunity often errs on the side of the scammer. Here’s how the con works. Criminals set up fake “get your crypto cash back” websites, including one that appears to be as if it’s from the U.S. Department of State. After luring their marks, these fraudsters contact those who respond by phone, email or social media and ask for personal ID information, including account numbers and passwords. They will ask (of course) for an advance fee for their (bogus) services, payable via gift card, cryptocurrency or wire transfer. The Federal Trade Commission (FTC) warns that you will get nothing from these fake services.

How to protect yourself

Cryptocurrency investments are not insured by the government the way bank accounts are. Sadly, funds lost to crypto scammers are often gone, never to be seen again. Do not trust anyone who contacts you promising that they can get your money back, says Frank McKenna, chief fraud specialist for the fraud detection company, Point Predictive.

From the FTC:

Refund and Recovery Scams

They’re the worst of the worst: scams that target people who have already lost money to a scam. If you’ve experienced a scam, you may be targeted by a refund or recovery scam. In these scams, someone says they can help get your money back or recover the prize or item you never got. You just need to pay them first. If you do, you’ll lose more money.


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