SAN FRANCISCO — Fraudsters who exploit LinkedIn to lure users into cryptocurrency investment schemes pose a “significant threat” to the platform and consumers, according to Sean Ragan, the FBI’s special agent in charge of the San Francisco and Sacramento, California, field offices.
“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 like this: A fraudster posing as a professional creates a fake profile and reaches out to a LinkedIn user. The scammer starts with small talk over LinkedIn messaging, and eventually offers to help the victim make money through a crypto investment. Victims interviewed by CNBC say since LinkedIn is a trusted platform for business networking, they tend to believe the investments are legitimate.
Typically, the fraudster directs the user to a legitimate investment platform for crypto, but after gaining their trust over several months, tells them to move the investment to a site controlled by the fraudster. The funds are then drained from the account.
“So the criminals, that’s how they make money, that’s what they focus their time and attention on,” Ragan said. “And they are always thinking about different ways to victimize people, victimize companies. And they spend their time doing their homework, defining their goals and their strategies, and their tools and tactics that 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 them to part with their money. The FBI confirmed it has active investigations but could not comment since they are open cases.
In a statement, LinkedIn acknowledged there has been a recent uptick of fraud on its platform, telling CNBC that “we enforce our policies, which are very clear: fraudulent activity, including financial scams, are not allowed on LinkedIn. We work every day to keep our members safe, and this includes investing in automated and manual defenses to detect and address fake accounts, false information, and suspected fraud.”
“We work with peer companies and government agencies from across the world with the goal of keeping LinkedIn members safe from bad actors. If a member encounters or is the victim of a scam we ask that they report it to us and to local law enforcement.”
LinkedIn’s senior director of trust, privacy and equity, Oscar Rodriguez, said, “trying to identify what is fake and what is not fake is incredibly difficult.”
“One of the things that I would really love for us to do more is get into proactive education for members,” Rodriguez said. “Letting members know or basically allowing them to understand the risks that they might face.”
The company says it removed more than 32 million fake accounts from its platform in 2021, according to its semiannual report on fraud. From July to December 2021, its automated defenses stopped 96% of all fake accounts — that includes 11.9 million that were stopped at registration and 4.4 million that were proactively restricted, the report said. Members reported 127,000 fake profiles that were also removed.
LinkedIn said its automated defenses caught 99.1% of spam and scams, a total of 70.8 million, in that same time period. Another 179,000 were removed after members reported them. LinkedIn said it doesn’t provide estimates on how much money has been stolen from members through its platform.
The company cautioned users in a Thursday night blog post on its platform against sending money to people they don’t know and responding to accounts with a questionable work history or other red flags, such as poor grammar.
That’s little comfort to Mei Mei Soe, a Florida benefits manager who says she lost $288,000 — her entire life savings — to a scammer on LinkedIn. It started out innocently enough with someone whose profile said he was a manager at a Los Angeles fitness company seeking to connect with her last December. They began chatting first over LinkedIn and then on a messaging app, and she said she was intrigued by his offer to help her make money.
Mei Mei Soe, fraud victim
“He asked me if I’m on LinkedIn for professional networking or if I’m looking for a job,” Soe said. “I never trust anybody, but we began talking and over time he gained my trust.”
Soe said when the conversation eventually turned to investing, “he showed me how he’s profiting from his investments and told me I should start investing with crypto.com which I know is a legitimate website. I started with $400.”
The fraudster convinced her to move her investments to a site he controlled. Over several months, Soe would make a total of nine transactions, which included bank loans and money borrowed from friends, hoping to use her earnings to start a small business. But Soe would soon learn that the connection she made on LinkedIn wasn’t who he said he was. In the end, she lost all of her funds.
“I still remember the 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 single dollar I save, I work hard to save that. It hurts.”
She said she never thought she would get scammed on LinkedIn.
Crypto.com said it immediately takes down accounts that it finds are linked to a scam.
“We take a proactive approach to managing and protecting against external threats, including scam and phishing campaigns,” it said in a statement to CNBC. “As with all financial transactions, fiat or crypto, it is critical to ensure the account receiving funds is legitimate and its owner is identified and trustworthy prior to the transfer.”
Soe’s story is not unique. A group of victims defrauded on LinkedIn which meets regularly over Zoom recently invited a CNBC reporter to join the session, as long as the participants’ faces were concealed and their names not revealed. Their losses ranged from $200,000 to $1.6 million.
“We just never thought there could be such malicious intent behind a LinkedIn profile,” one victim who lost $350,000 said.
“The fraudsters hide behind successful companies,” another victim who lost $200,000 said. “One of the biggest reasons I accepted the invite was the person stated on their profile that they worked for a legitimate company.”
“We’ve lost a lot of money,” a victim who lost $700,000 said. “And it’s not just all of our savings, people have lost their houses and their car loans. It’s life destroying and soul crushing.”
Ragan said he understands the victims’ pain, but they should not blame themselves.
“It’s not their fault that they were victimized,” Ragan said. “It’s the perpetrator’s fault. It’s the criminal’s fault. They spend their nights and days thinking about ways to victimize and defraud people. That’s how they make their money through illicit gains. And the people that fall victim to it, they’re victims.”
The Global Anti-Scam Organization, a victim advocacy and support group, has traced the majority of the perpetrators to Southeast Asia.
“They usually target victims on LinkedIn by showing that they have some entrepreneurial spirit,” Grace Yuen, Global Anti-Scam Organization spokesperson, said. “They may claim they graduated from a well-known university, then they say they’re in finance or in investment. Sometimes they even pretend to be in the same industry as you.”