Double scams: what are they and what are the consequences?

Fraud is on the rise, and cryptocurrency scams in particular are rife. Cryptocurrency scams continue to climb and are becoming increasingly sophisticated, with most scams being connected to large-scale organised criminal gangs from across the globe, often using artificial intelligence to target victims.

Victims caught up in these type of cryptocurrency scams are often caught out by fake trading platforms, unregulated and fake brokers posing as someone else. Those who have either recently inherited funds, or have a wealthy portfolio, or retirement pot, are typically amongst those targeted. Victims are now often then targeted in what is known as the ‘double scam’.

What is a double scam?

Victims are often approached by companies posing as asset recovery agents with promises that they can get the victim’s money back – for a fee. In more than 50% of cases, victims are deliberately targeted by fake recovery agents in an attempted double scam. Typically, the victims have put their life savings into the initial scam, only to fall victim to an additional scam.

The fraudsters will usually then sell lists of victims’ details to other organised criminal gangs. Essentially, despite having been defrauded already, your personal details effectively get put onto a list of those to be targeted again – that second approach is usually in the form of a fake recovery agent.

Victims to cryptocurrency scams are often very stressed and desperate to recover their funds. Some victims are also having to deal with the perceived embarrassment and emotional stress than comes with this. The fake recovery agents promise a recovery in exchange for a large sum upfront. Once the ‘fee’ is paid, the fake recovery agent becomes uncontactable. This type of fake recovery scam is also known as an advanced fee fraud: the victim pays a fee for something which will never happen.

What are the consequences?

The victim is usually convinced not to report the matter to the police, any law enforcement, or instruct a solicitor, since they allege that their involvement may delay the recovery of funds. By the time the victim realises what has happened, the funds are often moved out of reach and potentially transferred through multiple platforms.

If a victim is scammed, the only way in which a full recovery can be made (if funds can be located) is through a court procedure, with regulated solicitors and professional intelligence agents. Ideally, the law enforcement agencies and police would be able to assist victims, but the reality is that the exchanges (where the funds are often located), or the fraudsters, are almost always out of the jurisdiction.

In addition to jurisdictional challenges that face law enforcement, the police’s role is to ensure a prosecution, not the civil recovery of the victim’s funds. Whilst it is in the public interest to make reports of all such fraud to law enforcement, if a victim wants to recover stolen funds, a legal and investigation team must be instructed to act. It then falls on private investigators and lawyers to pursue the recovery.

The first step is for an intelligence agent (usually highly trained former law enforcement, military or security services personnel) to investigate the fraud, and trace and locate the stolen funds. If the fraud can be proven, and funds traced and located, victims will then need regulated lawyers to commence legal recovery action through the English court if they have any hope of retrieving their investments.

If you are concerned or think you may be a victim of a double scam, please contact Louise Abbott.

This article was co-authored by Robert Moore of Arrowsgate Limited.