Fraud Risk Assessment: BitHourly

BitHourly
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  • BitHourly
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  • Last modified: February 3, 2016
  • Legitimacy
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BitHourly (bithourly.net) was launched in January 2016 providing investment services from the United Kingdom (UK). The company’s legitimacy has been evaluated based on the items listed below. Every individual item has been checked for the presence of obvious red flags or warning signals. If these are present, an explanation detailing what triggered them has been included. A detailed description of the reasons to evaluate each of the included items can be found below the table.

Persuasion
Total Flags: 12 (3 Warnings = 1 Flag)
Phantom Richesflag-iconIt is advertised that BitHourly is the "best place for hourly earning" offering ludicrous profits (see High Return/Low Risk).
Scarcitythumb-up-iconN/A
Source Credibilityexclamation_warningThe website mentions it works with a "team of professionals", with multiple years of experience to build trust in the company's capabilities.
Social Proofexclamation_warningBitHourly has a 5 percent commission referral program, intended to get users to convince friends and relatives to invest as well.
Reciprocitythumb-up-iconN/A
Products
Guaranteed Returnflag-iconAs stated in the FAQ the company: "guarantees stable and fixed hourly interest for all of our customers at any given time"
High Return / Low Riskflag-iconWith plans starting at 0.16% per hour, users can make a compounded return of 4% per day. The website makes this calculation, but doesn't mention that this implies an annual return of more than 120,000,000% (guaranteed). This number is absurd, and tells us that this is not only a scam, but also one that cannot last very long.
Overly Consistent, Positive Returnsflag-iconThere are three available investment plans, all of which return a perfectly steady income percentage regardless of any external variable such as price volatility.
External Risk Insurancethumb-up-iconN/A
Secretive or Complex Trading Strategyflag-icon"Our activities are closely linked to advanced computer technologies, engineering and cryptocurrency mining using classical and modern algorithms as well as trading activity on crypto exchanges. Since 2016 BitHourly.net has developed and implemented an investment direction that should provide the possibility of purchasing expensive mining stations designed to increase the overall profits of the company." This is how the company generates money according to the FAQ. It should be noted that it includes many fancy terms, but altogether the description is nothing but vague and fails at providing any serious information.
Service
Website Availablethumb-up-iconYes
Website Registration Detailsthumb-up-iconBitHourly.net is a newly registered website, with its registration date on December 25 2015. It opened for business on January 21 2016.
Website Designflag-iconThe terms and conditions are missing.
Grammar on Websitethumb-up-iconGood
Payments Optionsexclamation_warningCryptocurrency only, leaving the recipient with sufficient anonymity.
Service Disruptions & Unbusinesslike Conductflag-iconThe lack of terms and conditions result an absence of any legal basis for doing business.
Contact Informationflag-iconThe company lists its address, but a phone number can only be found using a Whois service. This reveals that the phone number used to register the website is: +44.2035145513

This phone number has been used before to register http://www.rosanabancorp.com, according to the Fake Sites Database by aa419. The Whois data for this website is still available here, but the rest of this scam has disappeared.
Business
Verified Addressflag-iconThe given address (and used to register the website) is on:

45A Clarendon Road, London, W11 4JD
United Kingdom

Google maps shows that this address originates from a residential area, making it an unlikely business location. The business registration (see below) does not offer any certainty either.
Verified Ownerflag-icon"Eric Evans" is named as the official owner, but this person has no online footprint. It has also been established that at least the phone number used to register the website with is fake.

Along with the weak business registration (see below), the owner is left unconfirmed.
Business Registrationexclamation_warningBitHourly is registered with the UK's Companies House under registration number 09929508.

This registration is largely meaningless, because the Companies House does not actively check addresses and names.
Financial Regulator Registrationflag-iconGiven that BitHourly is an Investment Service, it should be regulated by the Financial Conduct Authorithy (FCA). There is, however, no record of the company in the public register.
Independent Auditsexclamation_warningNone

Note that items with a warning instead of a flag indicate that these could occur at a legitimate company. For example, legitimate companies will normally try to persuade you into buying their products. Multiple warnings will, however, still trigger a flag. A description for the listed items is provided below. This list is meant to assist with identifying obvious scams, and therefore does not provide any guarantees that a company is truly legitimate.

Phantom Riches
The most common tactic used by fraudsters is called “phantom riches”. By dangling the prospect of wealth such as “big payoffs”, the scam artist tries to get you to stop thinking logically.

Scarcity
Using the fear of missing out, fraudsters create a false sense of urgency with statements such as “last chance” or “only so few available”. This causes people to agree hastily, before even having the opportunity to think about what they’re doing.

Source Credibility
Persuasion is more likely when the source presents itself as being credible, expert and trustworthy. Common tactics used by scammers to make themselves look legitimate include using fake websites or hacked emails and pretending to be someone they are not. Alternatively, sources can also be external with claims such as “Warren Buffet has already invested in this”.

Social Proof
Fraudsters take advantage of herd behavior by creating the illusion of consensus or social proof that the investment is legitimate with claims that “everybody is already doing it”, or referral programs in which members encourage their friends and associates to invest as well. This automatically triggers something in the head that says: “if everybody [or someone from the inner circle] wants it, it must be good”.

Reciprocity
A business is likely to receive far more of our trust when it provides a lot of free value, because of the rule of reciprocity which causes us to tend to feel obligated to return favors after people do favors for us

Guaranteed Return
All investments carry some degree of risk, so a guaranteed profit is a clear red flag.

High Return / Low Risk
Like a guaranteed return, a high return / low risk investment opportunity also defies the common risk-return relationship. The best advice is an old one: “if it sounds too good to be true, it probably is”.

Overly Consistent, Positive Returns
Cryptocurrency markets are among the most volatile markets, hence the performance of any related product or service is also expected to fluctuate.

External Risk Insurance
The fraudster may present some external risk insurance for the investment in order to add to its credibility. In reality, insurance is only seldom acquired and guarantees typically lack substance. Dummy companies are often used to act as the guarantor or insurer.

Secretive or Complex Trading Strategy
Even in the world of cryptocurrencies one should be skeptical about special competitive advantages without any proper disclosure, or when the information is incomprehensible or incomplete. Too often only the positive elements are accentuated.

Website Available
Considering the importance of  domains and websites in the internet age, there is almost no reason for a legit company not to have one.

Website Registration Details
Very few scam websites survive longer than one year, so domains are generally registered for just one year unless otherwise required for the specific domain. For the same reason, websites created less than one year ago should be considered suspicious.

Website Design
Amateurish, cluttered and disorganized websites can point to a scam as many scam sites use text and images from legit websites and other sources which may not work together very well.

Grammar on Website
Many scammers have limited English proficiency.

Payments Options
Even though cryptocurrency payment options are logical for a cryptocurrency company, it is also very convenient for scammers as the recipient essentially remains anonymous. The same goes for services such as Western Union and Moneygram. Hence a lack of alternative payment options should still be considered a warning signal.

Service Disruptions &  Unbusinesslike Conduct
Especially Ponzi scheme promotors will encourage participants to “roll over” their investment. These schemes are not very fond of investors cashing out, which may lead to difficulties receiving payments and a non-responsive or difficult to reach customer service.

Contact Information
Legitimate companies have very little reason not to list their contact information.

Business Verification
First, you should never hand your hard-earned money over without knowing where it is going. Second, you should do a background check to avoid handing it to a known scammer. Be weary of people without an online identity. Scammers will typically try to hide their identity or conceal their true identity to avoid being easily discovered. Especially investment services are normally subject to strict regulatory oversight, so a registration should not be hard to find.

Independent Audits
Audits certainly do not root out every instance of fraud, but auditors do have a responsibility to detect errors or fraud in the company’s financial statements.

One Response

  1. Vigilante March 20, 2016

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