Cybersecurity Scams and Bitcoin

Official Case Information:

• $443,683 through an online bitcoin scam he access via Facebook.

• Victim made 48 transactions from his [NAME] bank account via his Visa card. He was constantly harassed by the scammers over a period of three months.

• The fraud was reported to police on 30/5/20. They have not been able to assist.

• I understand [BANK] says he chose to make the transfers, but offered $5,000 as ‘non-financial’ compensation, which was rejected.

Example of Bank Security Statement on Official Web Site:

More information about breaches in banking security if you have been scammed: https://www.westpac.com.au/security/

Official Bank Statement:

“Due to confidentiality obligations, we are unable to comment on individual customer matters.

“However, as a general statement there has been a rise in reported scam activity during the COVID-19 pandemic and we would encourage Australians to be extra vigilant at this time.

“BANK invests heavily in scam prevention and has robust processes in place to alert and protect customers. If customers are concerned about a potential scam, they can contact BANK on NUMBER to seek assistance or report suspicious activity.”

Pertinent Investigative Questions to [Bank] could include:

• Are you able to explain the financial offer made?

• Could more checks have been taken to insure money was transferred to reputable financial organisations?

• Do you consider Kevin to be a vulnerable person and if so how was this taken into account?

• What is the bank’s policy in seeking to avoid and stop financial fraud via bitcoin scams?

• Who does the bank work with to achieve this?

• Do you have any estimates of financial losses occurring as a result of such scams?

Context: How Scam Works

Scam possibly operates through a series of third party intermediary operatives that act as money transfer companies.

Refer also: Veritex, Blue Snow and Simplex. Money may be transferred to such and then on to others like Cryptex. Cryptex Exchange review: https://www.cointelligence.com/exchanges_list/cryptex/

ASIC information related to bitcoin scams. Warning granted but nothing further that is actionable. https://newshub.asic.gov.au/that-celebrity-endorsed-bitcoin-ad-is-probably-a-scam/#:~:text=ASIC%20is%20aware%20of%20cryptocurrency,and%20ads%20on%20social%20media

What Role Does Social Media Play?

Is Facebook obligated to stop scams? Possible bans imposed by platform providers. https://www.theguardian.com/technology/2018/jan/31/facebook-bans-ads-cryptocurrencies-scams

Report: https://www.thehindu.com/sci-tech/technology/hackers-use-fake-bitcoin-platform-to-scam-facebook-users/article33116303.ece

 Facebook Statement: https://www.facebook.com/business/news/new-ads-policy-improving-integrity-and-security-of-financial-product-and-services-ads

Reflections

• Consumer protection law in Australia is done well by the ACCC and the states. They coordinate well.

• Consumer protection law for financial services is the responsibility of ASIC. ASIC does not do nearly as well. Refer to the Hayne Royal Commission demonstrated this on Unfair Contract Terms but no improvement.

• Banks could flag when money goes into cryptocurrency exchanges. Although some exchanges are legitimate, they all have some measure of risk.

• Fake celebrity endorsements often appear on the pages of websites or Facebook pages of very large legitimate businesses which know they are there because they get paid large amounts for them.

• It seems unreasonable for major businesses not to take responsibility for phony advertising for which they get paid.

• Old adage “if it seems too good to be true it probably is” can be tested by the people who are putting it on their sites. Why not have that as a responsibility? It’s the site that’s making the money. Why not share the responsibility as well as sharing the profit?

Citation: Katina Michael with Nicholas McLaren and Justin Huntsdale, 17 March 2021, “Cybersecurity Scams and Bitcoin”, ABC Illawarra, Television and Online Print.