I think that peer-to-peer (P2P) cryptocurrency transactions have become popular lately due to their convenience and ease of use. However, it is important to be aware of the potential risks associated with P2P transfers.
Based on the feedback from our customer surveys, we have prepared this guide to provide information about the most common P2P scams in cryptocurrency transactions. We will also explore some essential tips to protect yourself from becoming a victim of these fraudulent activities.
Can someone scam you with P2P transfers?
Yes, scammers can exploit P2P transfers to deceive unsuspecting victims. They may use sophisticated tactics to manipulate transactions, misrepresent payments, or impersonate reputable platforms or individuals. By knowing the most common P2P crypto scams, you can minimize the risk of falling prey to these fraudulent schemes.
How do P2P crypto scams work?
P2P scams exploit the inherent trust and anonymity of peer-to-peer transactions. Various techniques are used to deceive people into handing over funds or confidential information. It's crucial to understand these scams and stay vigilant to safeguard your money and digital assets.
What are the most common P2P crypto scams and how can you spot them?
Payment Receipt Scams
Scammers can digitally manipulate payment screenshots to falsely claim they have fulfilled their part of the transaction. They pressure you to release funds or digital assets without verifying the receipt of money.
SMS Scams
SMS scams are a type of payment receipt scam where scammers send text messages to victims that look like notifications sent by banks or wallet apps. The messages falsely claim that the victim has received money from the other party.
Here's how to protect yourself from payment receipt scams:
1. Always check your bank account or e-wallet to confirm receipt of funds before marking a transaction as complete.
2. Be suspicious and cautious if the other party insists you release the funds before confirming the payment has arrived.
3. To avoid falling for SMS scams, always verify the charge by checking your bank account or cryptocurrency wallet directly instead of blindly trusting the content of the text message.
Chargeback Scams
Fraudsters initiate chargebacks, retracting the payments made. They may use third-party accounts to process payments, making it easier to reverse transactions.
An example of this is when the other party offers to pay you with a deposit check. This is because requesting a chargeback on check payments is very easy, so it's likely to be a scam.
To avoid chargeback scams:
1. Check that the name of the buyer on the payment details matches the verified name on the P2P platform.
2. Do not accept payments from third-party accounts, as they pose a higher risk.
3. If someone insists on paying by check, consider it a red flag and escalate immediately.
MitM Scams
In this scam, a con artist poses as an accredited trader on the exchange and contacts victims through external channels like Telegram, WhatsApp, or social media. They provide their bank account details and a link to a P2P ad and ask victims to confirm them by copying them into the P2P chat on the order page.
Unknowingly, the victim shares the scammer's bank account details with an unrelated buyer in P2P, who also has no idea about the scam. The victim releases cryptocurrencies to the unlinked buyer, who in turn sends the money to the scammer's bank account.
Reversing a transaction or getting customer service to intervene and resolve the issue is impossible in such cases. Since the victim contacted the scammer and obtained the details through communication external to the platform, and the funds were transferred to a third-party account unrelated to the users, the exchange's customer service cannot provide a solution.
To protect yourself from MitM scams, you should:
1. Communicate only within the P2P platform and avoid making transactions outside of it.
2. Remind buyers that third-party transfers violate P2P transaction policies.
3. Double-check the bank account details of the other party directly on the P2P platform.
4. Do not trust offers or information received from external channels while making P2P transactions.
Triangle Scams
Triangle scams involve two scammers simultaneously placing orders with the same seller. They exploit the seller's trust and urgency to release funds without proper verification.
Here's how a P2P triangle scam unfolds:
Scammer A places an order worth 5000 USDT in cryptocurrencies (Order A) and Scammer B places one worth 6000 USDT (Order B). Scammer B then transfers 5000 USDT to the seller.
At the same time, Scammer A marks Order A as paid. The seller releases the crypto to Buyer A, completing Order A for 5000 USDT. Scammer B sends another 1000 USDT to the seller, provides the payment receipt for 5000 USDT that Buyer A passed to him, and pressures the seller to release the digital assets of Order B.
Users engaging in triangle scams attempt to pressure the seller to release funds immediately without verifying the transfer. It can be easy to release the money without reviewing who initiated the transfer. If you're not careful, you could release the funds twice but only receive half or less of the assets you purchased.
To avoid falling victim to triangle scams during P2P trading, you should:
1. Confirm receipt of all pending P2P transaction funds before releasing any assets.
2. Be cautious of payment proofs provided by the other party, as scammers may try to reuse them.
Impostor scams.
Scammers pose as employees to trick users and steal their funds. They contact potential victims through unofficial emails or social media accounts, requesting personal information and initiating fraudulent transactions.
They might ask you to share your email address in the P2P chat window, claiming that KuCoin's escrow service needs this info to confirm the payment. Then, they could send you a phishing email that looks similar to the official communication, tricking you into releasing your crypto first to receive the payment.
To keep yourself safe from impostor scams, do the following:
1. They will never ask you to complete a P2P transaction via email. Do not release funds until you have received payment through the P2P platform.
2. Never share personal or contact information offline in the chat.
3. Ensure that payments are sent using the payment method specified by the other party and that the account name matches the verified name.
4. Be suspicious of external offers or information received through unofficial channels.
5. You can check the Official Verification Center to confirm the authenticity of relevant channels.
In Conclusion
While P2P transactions offer convenience, it's crucial to be aware of common scams and take necessary precautions to protect yourself. By understanding how these scams work and following the provided safety tips, you can minimize the risk of being a victim of P2P fraud in the crypto market.
Stay alert, be wary of offers that seem too good to be true, and always verify transactions and payment receipts before releasing any funds or digital assets. By following best practices.