Beware Cryptocurrency Scams – How Cape Codders Can Protect And Heal

Cryptocurrency fraudsters scammed American seniors out of more than $3.4 billion dollars last year - and Cape Cod is no exception.

6 December, 2024 – ORLEANS, MA – Cryptocurrency has gone from the fringes of society to the very center of it. In Orleans alone seven cryptocurrency ATM kiosks are registered on Google Maps, appearing in stores such as Cumberland Farms, Stop & Shop and Shaw’s. Because crypto is decentralized and harder for law enforcement to trace it is increasingly used in financial scams.

What Are Financial Scams?

This year the Orleans police have seen a small increase in reported cryptocurrency scams targeting Cape Cod’s seniors.  Although it isn't rising at the same rate as national scams, the Cape isn't immune, either.

“We haven't seen a lot of variations of it, here in Orleans at least,” says Andrew McLaughlin, Lieutenant at the Orleans Police Department. He says the cryptocurrency scams in Orleans have followed a typical pattern: The phone rings, an imposter says they are from the bank’s fraud department, someone is trying to steal money from your account and the bank believes someone from inside the bank is involved. They say: do not call the bank or law enforcement. Would you be willing to help us solve this case?

“And of course they’re gonna say yes,” says Lt. McLaughlin. The fraudsters emphasize urgency and emergency, putting the victim in a state of heightened emotions. Because the brain’s natural stress response is to lock in on the threat,  it cannot access rational thinking, a biological response the scammer make full use of.

What Do Financial Scams Look Like?

The victim is told to withdraw a large sum of money from their account, go to a cryptocurrency ATM machine and deposit it via a QR code. Once deposited, it is divided into many different digital wallets, making it difficult for law enforcement to find it. 

Are There Financial Scams On Cape Cod?

Orleans police have had at least 8 reported scams in Orleans in 2024, with total losses of around $30,000. Lieutenant McLaughlin says that because the fees at the kiosks are high - up to 20%-  a large reason for using them would be to hide traces of the scammers through the nature of crypto currency.

What is being done to stop these scams?

The AARP is lobbying for states to ban the kiosks. The Federal Trade Commission calls the kiosks "a payment portal for scammers."  So how do you protect yourself? It starts with awareness, say experts.

“Educate yourself,” says Lt. McLaughlin. He points to the Federal Trade Commission’s website, Town websites and the Police Department's website and social media. He says removing as much information about yourself as possible from the Internet can also be a protective measure.

“It can be exhausting seeking out this information,” he said. “If somebody's calling you, telling you that you need to do this, and if you don't, these are the consequences – stop. Take a breath. If it is in fact true, there is no major rush of dealing with this things.” He adds that nobody is immune to scams.

Who Falls For A Scam?

In fact, everybody is vulnerable to scams, but in different ways. At FINRA Investor Education Foundation research shows that peoples’ viewpoints of the world makes us prone to believe in different types of scams.

“For instance, individuals who believe that wealth is earned through lucky breaks (…) are more likely to be victimized in opportunity scams like sweepstakes, lottery and investment scams,” explains Christine Kieffer, Senior Director at FINRA Foundation. “On the other hand, individuals who have a strong sense of duty to authority, where they believe that it's their civic duty to believe authority and follow authority and follow the rules, are more likely to be victimized by authority based scams like scams that tell us they're helping us with our account (…) or even a grandparent scam where someone's claiming that they are an authority in another country, and you need to pay to help your grandchild.”

Who Is Targeted In Financial Scams?

All types of people may lie on the receiving end of the scams, but older people seem to sit in the center of the target, especially for certain forms of scamming. According to Kieffer, “Older populations are victimized more frequently in certain types of scams that target fear, grandparent scams, these account takeover scams where the scammer is pretending to help them, and tech support scams. These are really, really devastating to older populations. And sometimes individuals are losing hundreds of thousands of dollars."

How Many Financial Scams Are There Every Year?

The Elder Justice Initiative by the Department of Justice targets financial fraud exploiting our seniors. The FBI Office The Internet Crime Complain Center, IC3, receives 2 and a half thousand reports every day. The biggest portion is from folks aged 60 and above. In 2023, 100,000 people above 60 reported losses of over $3,4 billion. 

Who Are The Victims?

“I hear all the time: I cannot believe I fell for this,” says Lt. McLaughlin. A lot of these people (…) are extremely intelligent. They've owned their own businesses. (…) They're extremely well educated, have multiple degrees. I've talked to these people and they cannot believe they fell for it.” When a person is in a state of heightened emotion they are indiscriminately unable to access rational thinking. The scammers have hacked the human brain’s stress response, a so called amygdala hijacking. 

“Fraudsters love to manipulate our human emotions our human nature,” says Kieffer. “There are many neuroscientists that study the way we react under stress. And oftentimes our brain goes right to our sort of our primitive brain, right to the amygdala. And the amygdala is the center of the emotion. And so in many cases, the scam is something that individuals call an amygdala hijacking, whereas they hijack our emotional state and suspend our rational state in order to have us succumb to their desires.”

How Can You Get Help After Financial Scams?

Not every crime is reported to the police - but Kieffer urges victims to report the scam, as well as reaching out to friends and family, advocate organizations such as FINRA and their victim support collaboration project Give An Hour. 

She says telling someone will break the spellbound state; this is especially true while the scam is ongoing. Fear-based scams are very efficient she says because “it encourages us to act now before our rational brain can kick in and before we have an opportunity to tell someone else. When you've been approached by someone who's raising your emotions about an emergency related to money, telling someone else is one of the most important things you can do. (…) This secrecy adds to the effectiveness of [the scammers’] pitch. And (…) it keeps us from getting the help that we need to walk away from the scam.”

Financial scams are particularly steeped in shame and victim-blaming. “If you've been a victim of a scam, it's important for you to know that you are not at fault,” says Kieffer. “The scammers manipulated your emotions, they've manipulated your benevolence, your desire to help someone, your desire to protect your accounts, and they are to blame. It's very important that you take the steps you need to get help with the emotional aftermath of a scam. (…) Remember, it's not your fault.”