The Classic Check Scam Gets Its Bitcoin Variation
A Long Island, New York man has uncovered a new bitcoin scam that is emerging in the market. Michael Nagel, a part-time actor, said he almost fell for the scam before reporting it to his bank. The new bitcoin scam is referred to as the “Bitcoin Check Scam”, because it’s an adaptation of an old check scam technique.
Unfortunately, Bitcoin’s lightning growth since 2009 (and especially over the past year) has attracted many scammers looking to try out old tricks on a brand new audience. Bitcoin appeals to a far younger demographic, which are less likely to be familiar with classic financial scams that haven’t been seen much action in recent decades.
As bitcoin increases in value, scams become even more lucrative. As a bonus, the proceeds are less traceable than dollars, provided you have a means to convert them without touching a regulated exchange.
The decline of physical checks as a means to transfer money means millennials are probably even less likely to know about their associated scams.
Adaptation of the Old Fake Check Scam
Nagel contacted News 4 New York in the hope of warning others about the scam. Scammers are always adapting the ways they swindle, so here’s how this version unfolded:
Nagel looks for acting gigs online in his spare time, and came across a possible acting opportunity. He revealed the acting gig was for an insurance commercial. At first, everything seemed normal, as he received a contract and a promise of $3,500 USD payment — plus an additional wardrobe allowance.
Getting a check in the mail for work that has not been yet performed smells of a scam. However, when the reporter asked Nagel, he thought it was common to receive payment in advance and everything was bound by the contract they signed.
Michael Nagel Was Lucky, but Not All Are
Nagel received a check for $4,990 USD which he deposited into his account. Soon after that, though, the scammers asked Michael to withdraw $4,500 in cash and take it to a Bitcoin ATM.
Generally, the check scams work is to get the victim to deposit the check, and withdraw cash immediately before it’s cleared by the bank. If Nagel had gone further and deposited the amount to a Bitcoin ATM as requested, the money would likely never have been recovered.
Nagel smelled at rat at that point, and suspected the instructions to withdraw and deposit the money in a Bitcoin ATM was a scam. He immediately alerted the bank.
“I was lucky, I didn’t lose anything except time, patience and hair,” he said.
So Many Scams, FTC Says Be Careful
On regular occasions the Federal Trade Commission, which promotes consumer protection, has advised people to stay away from gigs that offer payment by check in advance. All too often, this type of check is fraudulent. The downside is that banks take up to two weeks to clear checks, therefore scams can take two weeks to be discovered.
The crypto space has seen exchange scams, the Twitter ’10x’ Scam, Fake ICOs, dubious cloud mining schemes, and multi-level marketing; however, this is the first time a bitcoin check scam has surfaced.
Bitcoin’s underlying technology, blockchain technology, is tamper proof if built well. However, the existing financial and legal ecosystem has a lot of weak links that permit such scams. In this case, bitcoin may provide a degree of anonymity for the criminal proceeds, but it’s the legacy financial system that permits the check scam to happen in the first place.
What are other ways masters operate their scams? Share your views in the comments section.
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