Products from high-end brands like Gucci, Louis Vuitton, as well as consumer electronics like Apple, have recently been advertised for spot prices between 50 and 300 Euros primarily to the general public in Sweden.
In order to finalise the purchase, individuals are being tricked into exchanging fiat currency to cryptocurrency.
Once such currency a transfer has been completed, the Instagram seller vanishes with the money, and the luxury products are never delivered to the buyer. This has persisted, even though cases are being reported to the law enforcement authorities.
Following informers from both representatives of Cryptocurrency brokerage platforms, as well as the internal sources in ‘Swedish Law Enforcement’, the more recent scheme targets mostly younger customers who are about 25 years of age and based on the wording of displayed content, they are mostly those with migration background.
Luxury products are advertised on relatively new Instagram profiles with a significant number of new followers. Customer who have been conned, and are interested in a purchase usually contact the seller via direct messages.
The fraudster then tricks the customer by giving some excuses that because of the breakdown in operation, (like – moving between countries and change of bank accounts) the current bank account cannot be used.
Furthermore, as the price of the product is being displayed as a bargain, the fraudster trial to convince the buyer to act fast on the item because there is already a long queue of other customers who also desire that purchase the similar particular product; therefore, the buyer is urged to act quickly.
The seller suggests transferring the funds using one of the Cryptocurrency exchange brokerage companies, and also provides a digital cryptocurrency wallet address (DCW) which can be compared with a bank account number, but with limited traceability.
Magnus Karlsson, a strategic analyst at the ‘Financial Intelligence Unit’ of the Swedish Police, underlines that users should conduct careful research before proceeding on any online purchase.
This is to make sure that the recipient of the transfer is also the company or the person offering the product, service or technology.
The anonymity (or rather pseudonymity) of the digital cryptocurrency holders and the irreversibility of the transactions are popular as cash among criminals.
Similar to the untraceability of fund transfer to cryptocurrency wallets, this complicates the process of finding the perpetrator and take back the illicit gains – to say the least.
After a confirmed transfer, the seller usually stops answering direct messages from the customer and deletes his or her account in order to potentially run the whole process again with the same scheme, using a different ‘moniker’.
As stated by a compliance expert from a leading Nordic Cryptocurrency Brokerage Platform.
As our customer service engages way quicker with the users than the Police – our employees flag suspicious accounts or wanted to engage with Instagram customer service via their support email. Unfortunate as the customer service of Instagram is literally non-existent, it increases the delays to take countermeasure Furthermore, as the law enforcement agencies have to process thousands of cases, there is a significant delay between the day when the fraudulent case is reported and when the police will spot the suspicious pattern in the fraudulent transactions. We would like to do more but that’s not possible because Instagram is just not very responsive as they don’t have a dedicated email address for their fraud department and claim that they have done enough for users to flag the fraudulent advertisements in their app as spam; what unaware users only rarely do otherwise they might not be scammed in the first place.
The spokesperson from Instagram’s Press team confirmed that they have blocked accounts displayed as proof of fraud in an email exchange.
Furthermore, Instagram’s spokesperson underlined that their team “proactively fights against this type of content, and are always improving systems to quickly detect and remove anything that violates Community Guidelines”.
Reflecting on the fact that Instagram’s support email, firstname.lastname@example.org, instantly replies to a FAQ section on Facebook, and that not even registered financial institutions are flagging potential fraudulent transactions that have a possibility to create a secure channel to inform them about potential suspicious profiles, in this particular fraud wave, the definition of the word ‘proactive’ remains questionable.
This story originally appeared in Forbes. Image courtesy of Getty Images.