Got scammed? Why it's 'really, really difficult' for victims of crypto scams to get their money back | CBC News (2024)

Julia Knope · CBC News

· Posted: Dec 21, 2023 4:00 AM EST | Last Updated: December 21, 2023

This year, Sharon Doughty and her parents won't beholding their annual Christmas dinner after ayears-long scamcaused $250,000 in damage andfracturedfamily ties.

"It's affected us greatly, not just financially, but emotionally," said the 42-year-old Doughtyin an interview with CBC Toronto.

"Our family dynamic will be changed forever."

In August 2021, Doughty says her 74-year-old motherwasapproached by cryptocurrency fraudsters. Unbeknownst to her family,her mom went on to invest $80,000 over the course of four months, all of which was taken from lines of credit, credit cardsand liquidated retirement assets.

Doughty says thescammers developed a relationship with her momand showed her fake account balances that led her to believe her investments were making a considerable amount of returns. CBCToronto has agreed to withhold the identity ofDoughty's parents, who still have an open investigation with Peel police.

In December 2021, Doughty says her mom tried unsuccessfully to withdraw her money.That's when Doughtysays her mom fell victim to what is commonly known as a recovery scam—when thevictim is contacted by someone else after losing their money who then offersto get itback for a fee. Police say this is typically the same scammer acting as another person.

"I attribute it to a slot machine," Doughty said of her mom's recovery attempts. "Shejust keeps putting money in because she thinks she's finally going to get her money, which she's not, because it doesn't exist, right?"

All told, her momlost $250,000 over a two-year period.

It wasn't until April 2023, when police arrived at thefamily's Brampton home,that Doughty, her brother and father learned of the scam. Not only had the fraudsters taken the funds, Doughty says, but they alsohad complete control over her mom's devices and were using her bank account to launder money.

"It's pretty shocking," shesaid. "Really upsetting."

$200M lost to fraud since May in Toronto

With the help of her family and police, Doughty's mom regained control over her accounts. But she has yet to recover a single dollar. Peel police say no arrests in the case have been made. Though police say stories like Doughty's are all-too common.

In Peel Region, 37 cryptocurrency scam reports have been made to the police's cyber support services so far this year, with some $7 million in reported losses.

In Toronto, there have been 200 reports of crypto schemes between May and November alone,totalling $20 million in losses. Police say these figures only reflect what's been reported. The actual numbers are likely 90 to 95 per cent higher.

When a victim's funds are swindled through crypto scams or investment fraud, it's nearly impossible to recover, says Det. David Coffey, with the Toronto Police Financial Crimes Unit.

When it comes to investment fraud and crypto scams, Coffey said the victim is essentially handing cash to someone anonymously over the internet. Those funds can end up anywhere in the world.

"Once that money is deposited ...it's received, there's no way of getting it back," he told CBC Toronto.

"It's really, really difficult," Coffey said. And while there are ways for police to recover funds, he saysit's ultimately up to the victim to realize they're being scammed in the first place.

Recognizing you've been scammed

Once someone realizes they're being scammed, Coffey says the best thing todo is immediately contact their financial institution to see if they can stop any ongoing payments He says it's important to file a police report as soon as possible, so the scam can be flagged and investigated..

"Cryptocurrency is not a black hole," he said.

"There are ways that we can trace and we've had success in recovering funds from cryptocurrency scams."

Once the initial police report has been filed, Coffey recommends the victim ask their bank to put flags on their accounts, since they may have unknowingly provided information that allows fraudsters access to the victim's accounts.

The victim should also contact Canada's two main credit agencies, TransUnion and Equifax, to place a fraud alert. Those agencies compile information regarding people's credit history from banks and other financial institutions. By placing an alert, the creditor or lender can contact the victimif someone tries to get credit in theirname.

Lastly, Coffey says people should not count on anybody on the internet to recover their funds as only the police and financial institutions have "any chance" of getting money back.

"It's tragic because people lose all this money, they're desperate, the fraudsters know they're desperate. And then they reach out and they just want more," he said.

"They're never satisfied."

Protecting yourself from future scams

"For people who are victimized, really, it's not their fault," said financial crime expert Vanessa Iafolla. "This is like the full time job of a scammer. This is what they do."

So the last thing a scam victim can do is forgive themself, she says, and then take the necessary precautions to make sure it doesn't happen again. She recommends only investing in the future if you understand exactly what you're investing in.

"If you aren't comfortable explaining it to three other people, don't invest in it for yourself," Iafollasaid. "Because there are going to be gaps in your knowledge that will put you at an increased risk of fraud victimization."

Sharon Doughty and her familyare still struggling in the aftermath.

Doughtyhelped her parents refinance two of their properties. And while they are now out of debt, the emotional damage is unresolved andDoughtyand her mom are no longer on speaking terms.

"I'm not going to be able to sit down like with my mom and have a nice Christmas meal like we would typically do," she said. "Moments that I wanted to celebrate with my mom this past year were kind of ruined."

Doughty says she's trying to stay positive:

"My parents are still healthy and we're all aliveand I'm thankful for that."

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