SAN FRANCISCO — Fraudsters who leverage LinkedIn to lure users into cryptocurrency investment programs pose a “significant threat” to the platform and consumers, according to Sean Ragan, the FBI’s Special Agent in Charge of field offices in San Francisco and Sacramento, California.
“It’s a significant threat,” Ragan said in an exclusive interview. “This type of fraudulent activity is significant, and there are many potential victims, and there are many past and current victims.”
Sean Ragan, FBI special agent in charge of the San Francisco and Sacramento field offices.
The scheme works as follows: a fraudster posing as a professional creates a fake profile and contacts a LinkedIn user. The scammer starts with small chats on LinkedIn messaging and eventually offers to help the victim earn money through crypto investment. Victims interviewed by CNBC said that since LinkedIn is a trusted platform for professional networking, they tend to believe the investments are legitimate.
Typically, the scammer directs the user to a legitimate crypto investment platform, but after gaining their trust for several months, tells them to move the investment to a site controlled by the scammer. The funds are then withdrawn from the account.
“So criminals, that’s how they make their money, that’s what they focus their time and attention on,” Ragan said. “And they’re always thinking about different ways to victimize people, victimize businesses. And they spend their time doing their homework, defining their goals and strategies, and what tools and tactics they use.”
Ragan said the FBI has seen an increase in this particular investment fraud, which is different from a long-running scam in which the criminal pretends to show a romantic interest in the subject to persuade him to part with his money. The FBI confirmed it has active investigations but could not comment as these are open cases.
In a statement, LinkedIn acknowledged that there had been a recent increase in fraud on its platform, telling CNBC that “we enforce our policies, which are very clear: Fraudulent activity, including financial scams, is not not allowed on LinkedIn. We work every day to keep our members safe, and that includes investing in automated and manual defenses to detect and address fake accounts, misinformation, and suspected fraud.”
“We work with peer companies and government agencies around the world to help protect LinkedIn members from bad actors. If a member is scammed, we ask them to report it to us and law enforcement. the local order.”
LinkedIn’s Senior Director of Trust, Privacy and Fairness, Oscar Rodriguez, said, “Trying to identify what’s wrong and what’s not is incredibly difficult.”
“One of the things that I would really like us to do more of is get into proactive member education,” Rodriguez said. “Informing members or essentially allowing them to understand the risks they might face.”
The company claims to have removed more than 32 million fake accounts from its platform in 2021, according to its semi-annual fraud report. From July to December 2021, its automated defenses blocked 96% of all fake accounts, including 11.9 million that were blocked during registration and 4.4 million that were proactively restricted, according to the report. Members reported 127,000 fake profiles which were also taken down.
LinkedIn said its automated defenses detected 99.1% of spam and scams, or a total of 70.8 million, during the same period. Another 179,000 were taken down after members reported them. LinkedIn said it does not provide estimates of the amount of money stolen from members through its platform.
The company warned users in a Thursday evening blog post on its platform against sending money to people they don’t know and responding to accounts with questionable work history or other red flags, such as bad grammar.
That’s cold comfort for Mei Mei Soe, a Florida benefits manager who says she lost $288,000 — all of her savings — to a LinkedIn scammer. It all started innocently enough with someone whose profile said he was the director of a Los Angeles fitness company trying to get in touch with her last December. They started chatting first on LinkedIn and then on a messaging app, and she said she was intrigued by his offer to help her earn money.
Mei Mei Soe, victim of fraud
“He asked me if I was on LinkedIn for professional networking or looking for a job,” Soe said. “I never trusted anyone, but we started talking and over time he gained my trust.”
Soe said that when the conversation finally turned to investing, “he showed me how he was profiting from his investments and told me that I should start investing with crypto.com, which I know is a legit website. I started with $400.”
The fraudster convinced her to move her investments to a site he controlled. Over several months, Soe would complete a total of nine transactions, which included bank loans and money borrowed from friends, in hopes of using his earnings to start a small business. But Soe would soon learn that the connection she had made on LinkedIn was not who he claimed to be. In the end, she lost all her funds.
“I still remember that day,” Soe said. “Once I realized I had been scammed, I tried to contact him but couldn’t find him anywhere. I work hard, and every dollar I save, I work hard to save him. It hurts.”
She said she never thought she would get scammed on LinkedIn.
Crypto.com said it immediately removes accounts it deems linked to a scam.
“We take a proactive approach to managing and protecting against external threats, including scam and phishing campaigns,” he said in a statement to CNBC. “As with all financial transactions, fiat or crypto, it is essential to ensure that the account receiving the funds is legitimate and that its owner is identified and trustworthy before the transfer.”
Soe’s story is not unique. A group of LinkedIn fraud victims who meet regularly on Zoom recently invited a CNBC reporter to join the session, on the condition that participants’ faces be covered and their names not disclosed. Their losses ranged from $200,000 to $1.6 million.
“We never thought there could be such malicious intent behind a LinkedIn profile,” said one victim who lost $350,000.
“Fraudsters hide behind successful businesses,” said another victim who lost $200,000. “One of the main reasons I accepted the invitation was because the person listed on their profile that they worked for a legitimate company.”
“We lost a lot of money,” said one victim who lost $700,000. “And it’s not just all of our savings, people have lost their homes and car loans. It destroys lives and crushes souls.”
Ragan said he understood the pain of the victims, but they shouldn’t blame themselves.
“It’s not their fault they were victimized,” Ragan said. “It’s the abuser’s fault. It’s the criminal’s fault. They spend their nights and days thinking of ways to victimize and defraud people. This is how they make their money through illicit gains. And the people who are victimized are victims.”
The Global Anti-Scam Organization, an advocacy and support group for victims, has traced the majority of perpetrators to Southeast Asia.
“They usually target victims on LinkedIn by showing that they have an entrepreneurial spirit,” said Grace Yuen, spokeswoman for the Global Anti-Scam Organization. “They may claim they graduated from a well-known university and then they say they are in finance or in investing. Sometimes they even claim to be in the same industry as you.”
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