Crypto Recovery Service Scams
People who have already lost money to a crypto scam are often targeted over and over by fraudsters.
Often, the new contact comes from people saying they can recover the lost funds, but these so-called "recovery room" operations are a second scam.
The Financial Conduct Authority (FCA) warns that these scams often involve criminals impersonating regulatory bodies, such as the FCA itself, solicitors, or claims companies. They may claim to be able to trace, reverse, or "release" the stolen crypto assets, but in reality, they are just after more money.
The Second Scam
After falling victim to a crypto fraud, many people are at their most vulnerable and desperate to get their money back. Scammers exploit this by reaching out with the promise of recovery services. These "recovery room" scams can take various forms, but they all involve one key element: demanding upfront payment before doing any work.
The FCA warns that it will never ask for payment to recover money or for bank details to release funds. It also notes that recovery room scams are common, specifically targeting individuals who have already lost money to fraud.
If you've been contacted by a firm offering to recover your lost crypto, the FCA urges caution.
The FCA's warning list for firms and individuals may include many of these scammers.
What to Do – The Right Way to Report and Recover
When it comes to dealing with crypto fraud, the legitimate course of action is clear. In England and Wales, you should contact Action Fraud, the UK's national reporting centre for fraud and cybercrime.
If the theft happened through a crypto exchange, contacting their customer support is also a critical first step.
However, it's important to note that even legitimate tracing firms cannot guarantee the recovery of stolen crypto.
Red Flags of a Recovery Room Scam
There are several warning signs to watch out for when dealing with recovery room scams. One of the most significant is being asked to pay an upfront fee. Legitimate firms should not demand payment before performing any services.
Another red flag is if the firm claims to be associated with the FCA or other regulatory bodies. While not definitive proof, unauthorised firms could be using these claims to gain your trust.
Furthermore, if the company is pressuring you to act quickly or claiming that the money is locked and can only be recovered after a payment, these tactics are a classic of a crypto scam.
What to Do First
If you suspect you're being targeted by a recovery room scam, the first thing you should do is to stop further payment, because the FCA guidance on reporting scams is clear.
Then, the FCA recommends checking their warning list of unregulated firms.
Finally, report the firm to the FCA and the relevant authorities. This process helps protect others from falling victim to the same scam.
General information, not financial, investment or tax advice. Rules, fees and allowances change: check the figure with HMRC, the FCA or the service itself before you act.
