July 5, 2022

Scammer round-up: July 2022

Written by kevin-c

Tips & Tricks

Every month, we here at TextNow take a look at some of the calling and texting scams being perpetrated by bad actors targeting phone users of all kinds (not just TextNow). We work very hard here to keep scammers and fraudsters off our platform, but with millions of messages and calls sent every day, it's a big job. All carriers are in the same boat of trying to restrict their platform to legitimate users.

So, in the spirit of public service, here are some of the recent scams going around you should avoid:

The "Pump and Dump”

You might remember when we warned you against some of the common cryptocurrency scams, and now there's an interesting new wrinkle that uses tactic similar to a stock-trading scheme known as “pump and dump.”

In a pump and dump, rather than trying to scam money directly from victims, the scammer spams out a “hot stock tip” about how the scammer made a pile of money buying a particular stock.

Behind the scenes, the scammers have already bought tons of this “hot stock” at bargain basement prices. Every new person they get to purchase more stock raises the price (and the value of the scammers' stock holdings). Once the stock goes up, the scammers dump their stocks at a much higher price than they paid.

The Rug Pull

Crypto scams add an extra wrinkle to pump-and-dump schemes, fueled by confusion around how cryptocurrency works.

Rug pull scams involve investment scammers "pumping up" a new crypto coin or project to get funding. Then, once they get enough people to invest, they take off with the money – aka pull the rug out. The investors are left holding the bag, having bought a coin that no one actually wants.

A popular version of this scam was the Squid Coin scam, named after the popular Netflix series Squid Game. Investors had to play an online game to earn cryptocurrency, which to inflates the value of the coin. Once the price starts to rise more people want to get in on it for the promise of the coin growing astronomically in value. By doing this, the price of the Squid token went from being worth $0.01 to about $90 per token.

Then the Squid Coin minters stopped the trading of Squid Coin and bolted with the cash made from selling what was essentially a worthless coin at $90 per coin. The coins value immediately dropped to zero, as the coin investors tried and failed to sell them.

All told, the scammers managed to make off with about $3 million – in real US dollars, not cryptocurrency.

Because of the unique nature of cryptocurrency, and because there’s zero regulations around cryptocurrency, there’s effectively no recompense for the victims. The rug pull scam can extend to NFTs (non-fungible tokens) as well.

Here are some tips (courtesy of the FTC’s scam reporting site) to help steer clear of a cryptocurrency con:

  • Only scammers will guarantee profits or big returns. No cryptocurrency investment is ever guaranteed to make money, let alone big money.

  • Nobody legit will require you to buy cryptocurrency. Not to sort out a problem, not to protect your money. That’s a scam.

  • Never mix online dating and investment advice**.** If a new love interest wants to show you how to invest in crypto, or asks you to send them crypto, that’s a scam.

Until next time, keep your eyes peeled for these and other potential scams and stay safe out there.