Uni of Queensland Highlights Need for Education on Crypto Scams

Newsflash: unsolicited advice from social media may not be the best way to safely invest in crypto. 

A new study from the University of Queensland (UQ) has found that lack of access to quality online information from trustworthy sources, not socioeconomic status, is the most important risk factor for falling victim to a cryptocurrency scam.

The study, which was led by Associate Professor Levon Blue at UQ’s Office of the Deputy Vice-Chancellor Indigenous Engagement, identified an urgent need for more online educational resources to help Australians avoid falling victim to cryptocurrency scams.

“The number one place people learned about cryptocurrency was social media,” Dr Blue said.

Related: Northern Territory Police Warn Crypto Scams Pose Huge Threat After Billions in Losses 

Study Finds Two Major Groups Vulnerable to Crypto Scams

This study involved a survey of 745 Australians who had purchased cryptocurrencies and / or non-fungible tokens (NFTs). Out of this survey, two groups were identified as more likely to fall victim to crypto scams—one was socioeconomically disadvantaged while the other was not.

Dr. Blue described the first of these at-risk groups as “more likely to be female, Indigenous, casual or part-time workers, renters, a high school or below education or with English as a second language – so with a lot of features we associate with socioeconomic disadvantage.”

In the study this group reported that they were “influenced by social media hype to buy crypto and lacked sufficient financial or IT literacy.”

By contrast Dr. Blue said the other group had many hallmarks of socioeconomic advantage, such as “university education, full-time work, being non-Indigenous or owning their home or paying off a mortgage.”

This group described themselves as being more financially literate, and according to Dr. Blue they may have been complacent to the risks of crypto, assuming “they wouldn’t become a scam victim.”

Crypto Scams Thriving in Australia Amid Information Vacuum

According to Dr. Blue, Australians lost over $170 million to crypto scams in the past year:

Cryptocurrency investment scams cost Australians a reported $171 million last year alone, and that figure is only set to grow as more people embrace new forms of digital finance products and services.

Associate Professor Levon Blue

Related: ASIC “Very Concerned” about Crypto Fraud, Makes Move Against Miners 

While this is a worrying figure it is still only a relatively small fraction of the $2.7 billion the ACCC says was lost to all scams. Nevertheless, Dr. Blue says it’s important that action is taken now to limit the growth of crypto scams by educating potential investors about the risks of crypto and providing useful, accurate and trustworthy information:

Our findings suggest that online financial education from trusted independent sources is urgently needed to help combat scams and to keep Australians and their crypto assets safe…We recommend that education about alternative forms of financial products is offered in schools, vocational settings and university.

Associate Professor Levon Blue