The exponential rise in popularity of crypto-currencies such as Bitcoin has created a ‘gold rush’ among investors, both experienced and amateur.
Article / 21 Jan 2022
Scam crypto ads: beware of celebrity endorsements
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The credibility of such currencies has been ratified by the opening of official trading markets and platforms. For example, the Union Bank of the Philippines recently announced it plans to offer trading for crypto-currencies.
This stellar ascent has been fuelled by celebrity endorsements. Elon Musk famously promoted Dogecoin via personal tweets and confirmed that Tesla would accept Dogecoin as payment for some of its merchandise. Kim Kardashian and Floyd Mayweather also became embroiled in legal action as a result of endorsing the crypto-currency EthereumMax – investors who lost out claimed they were deliberately misled by such promotions.
The examples listed above relate to crypto-currencies which are legitimate (or at least claim to be in the case of EthereumMax). However, there is a much darker side to crypto-currencies, whereby sophisticated criminal syndicates utilise fake celebrity endorsements to promote phantom currencies that do not exist, in turn stealing from unwitting, mostly arm-chair investors.
Are all celebrity endorsements real?
The BBC recently reported that such criminals had used advertisements with fake endorsements from Harry and Meghan, the Duke and Duchess of Sussex. The Times also reported that the England football manager, Gareth Southgate, was also touted as a fake endorser of a scam currency.
The damage being done to everyday investors by such scams cannot be overstated and is becoming ever more widespread. One woman lost £250,000 to a fraudulent bitcoin broker and the government are now introducing urgent legislation to place the promotion of crypto-currencies under the regulatory control of the Financial Conduct Authority (FCA) in order to protect the public. The FCA have also confirmed a worrying four-fold increase in such scams in the last calendar year alone.
How sophisticated are these scams?
These scams are also becoming more sophisticated, with dedicated sales, business development and marketing teams pushing out glossy, professional looking brochures and websites containing heavyweight ‘endorsements’. My own sister, who is an experienced teacher, was taken in by one of these scams recently, but luckily I was able to warn her in time. It was a fake endorsement by one of TV’s ‘Dragon’s Den’ stars that persuaded her to part with her hard-earned cash.
Martin Lewis and Facebook case
Sadly this is not a new phenomena. In 2019 I acted for TV’s ‘Money Saving Expert’ Martin Lewis in his ground-breaking defamation case against Facebook. Anonymous criminals were using Martin’s image without his permission to promote scam crypto-currencies on Facebook. In a single year over 1000 of these scam adverts were appearing on Facebook.
At that time, each advert had to be reported to Facebook via a cumbersome, generic reporting tool for it to be removed. Due to the volume of these fake ads, Martin had to dedicate a whole team of his staff to spend every working day reporting these scams to Facebook. Martin told me he was also rung by an elderly lady who blamed him for the loss of her life savings as a result of his ‘endorsement’. This was devastating to hear for Martin – someone who had dedicated his whole life to protecting and fighting for the consumer. Enough was enough. He sued Facebook for defamation in their role as a secondary publisher of these scams.
The great irony was that Facebook was unwittingly profiting from this criminality, due to the advertising fees they charge. However, and in fairness to Facebook, they (along with Martin) were facing a ‘whack-a-mole’ situation, as when they removed an offending advert, the criminal would slightly alter the wording or algorithm of the same advert to get around Facebook’s cull and it would appear again the next day.
Thankfully, the case was settled with Facebook agreeing to introduce a stream-lined and dedicated reporting tool for scam adverts and donating £3 million to Citizen’s Advice for a project designed to protect the public against this insidious practice.
Sadly, Martin’s image is still likely being misused by such scammers. They tend to target celebrities with business or financial acumen, so images of, and ‘quotes’ from, Alan Sugar, Warren Buffett and Bill Gates are also misused in this way. I even received a call from a young, barely-known entrepreneur who had set up a successful rival to Purplebricks and was having his image used in scam adverts.
I'm a victim of crypto fraud, what can I do?
If you have fallen victim to these scams, whether as an investor or rather your image or ‘endorsement’ being used without your consent, then there are legal measures that can protect you. As with the Martin Lewis case, direct pressure can be applied to social media companies that publish these adverts, for example using defamation, copyright, harassment and data protection laws. We can also track down anonymous criminals using trusted cyber and intel professionals. Once identified, we use legal action directly against the culprits, such as court injunctions, ‘unmasking’ orders, ‘cease and desist’ or ‘take down’ notices.
You can report scams to the Metropolitan police’s ‘Action Fraud’ helpline and the FCA have powers to investigate and penalise the criminals involved. Banks are also becoming more willing to re-imburse victims under their fraud policies, so do inform you bank immediately.
Gateley Legal has a dedicated ‘Digital Assets and Currency Group’ with specialist lawyers in finance, reputation management, regulatory, crime and tax law. Please do not hesitate to contact us if you have been targeted by these unscrupulous scammers.