Between April 2020 and March 2021, Action Fraud received over 500 investment fraud reports which made reference to a bogus celebrity endorsement, with losses reaching over £10m. Fraudsters have been using social media platforms like Instagram and Facebook (FB) to scam investors, particularly those interested in cryptocurrency, who have ended up losing £63m ($89m) in the past 12 months. More than 5,000 reports of investment fraud to Action Fraud, the national reporting centre for fraud and cybercrime, referenced a social media platform. Instagram was the most referenced one, with 35.2% of complaints. 27.5% of all social media investment fraud victims were aged 19 to 25, and 61% were men.
Recently, an Instagram trader Gurvin Singh, 22 was accused of misleading hundreds( out of 170,000 followers) into losing £4 million in an offshore investment scheme. Singh admitted to signing a marketing agreement with the Bahamian company but ‘thought nothing of it’ as he insisted he dealt with Infinox UK staff. He denied acting dishonestly or handling any of the missing millions. Some 1,250 people are believed to have lost sums from £500 to £88,000 when the seemingly successful scheme collapsed in a 48-hour period over Christmas 2019.
Asian Voice reached out to MishiPay founder and CEO Mustafa Khanwala to get a sense of how tech frauds have gained momentum during the pandemic. Were they the same before Covid? Khanwala said, “The frauds themselves have not changed or become more sophisticated, yet the pandemic saw an increase in the number of people utilising the web, along with an increase in the amount of time spent online; which resulted in the success of fraudsters rising proportionally.
“Online fraud has a much wider scale as you can program bots to automate millions of messages to millions of people, so even if you have a very low hit rate, you end up scamming far more people than you would on the street.
“Another factor to take into consideration is that overall we were a lot more vulnerable during the pandemic, looking for help in many ways wherever we could find it, and unfortunately that makes people more susceptible to such attacks.
But what leads to tech frauds?
The MishiPay founder said, “As with all crime, it’s a combination of means, motive and opportunity. For many criminals, the risk of getting caught (or worse) is significantly lower taking part in tech frauds compared to more traditional heists. On the other hand, tech services such as online banking are still fairly new to most people. If you had to visit your bank to move money you might think twice, today you can move it from your armchair instantly - and criminals play on that with urgency and fear.”
Who can help in bringing down the rate of these frauds?
Khanwala said there are three key sources that could help decrease the rate of fraudsters:
1) The Government - by imposing an increase in stringent laws and further repercussions for those fraudsters that get caught.
2) Regulators - by raising standards of security across the ecosystem and providing better corporate governance rules in private corporations, to keep people's data safer.
3) Educators - by generating further awareness amongst the public of how to stay safe and secure online.
What do we need to prepare for in advance to avoid Tech glitches and frauds?
Khanwala believes we need to improve technical literacy, provide people with heightened access to safety and security tools, and think about the next utility after the access of the internet, which will be access to security - to use the web more safely.
“Preventive measures need to be taken such as the work being done in PSD 2 and other areas, resulting in strong customer authentication on payments, better ID validation on both sides of marketplaces and other such protocols. Yet on top of this, further work is needed on internet fraud insurance. We need to take into account the fact that such fraud is only likely to increase in the near future and that people should have the chance to bounce back after they have been defrauded,” he added.
Speaking to Asian Voice about tech frauds, Neha Mehta, Founder and CEO, FemTech Partner explained that, “2020 was a difficult year for many of us. "Lockdowns" and "social distancing" became a norm. Over the past months, the pandemic has caused many people to get retrenched or involuntarily jobless. However, there have been cases of people taking advantage of the pandemic. There is an increase in cases of tech fraud where unsuspecting users donate money on fake portals. It has been reported that people have lost millions in such donations. According to recent research, it has been reported that more than 80% of the scams have something to do with the pandemic. New scams and frauds will continue to make headlines with new inventions in technology. Therefore, a quick background check or research before donating money is always preferable.”
