Cryptocurrency, or digital money, is a currency used for digital payment and investment that has gained attention in recent years. Common examples include Bitcoin, Litecoin, and Ethereum. Scammers have caught on to the trend and are using cryptocurrency to target consumers.
The Federal Trade Commission reports cryptocurrency does not have the same protections as U.S. dollars. Cryptocurrencies are not insured by the government like U.S. bank deposits are. Scammers know this currency is not easily refundable, so they lure people in with money-back guarantees or the promise of a big payout. Scammers also promise complete anonymity or transaction privacy, however, most cryptocurrency sites use blockchain technology, which keeps an encrypted log of all transactions. This information can be traced back to the individual and can be used to steal money and information.
Cryptocurrency scams are happening right here in the Miami Valley. In June of 2019, a Kettering man reported he lost $13,000 in a cryptocurrency scam to BBB’s Scam Tracker, an online tool that enables people to report scams to help prevent others from falling prey to similar cons. The company promised to refund his money, but ultimately kept it and banned him from its website.
Investing in cryptocurrencies may appear beneficial and secure, but there are risks involved. The value of digital currency can change hourly, so there is no guarantee your investment will appreciate over time. Investing also opens up you and your devices to cyberattacks. Like the consumer mentioned above, you may be promised a money-back guarantee, but there is always a possibility of a large financial loss.
A common investment opportunity is called an Initial Coin Offering or ICO. ICO’s are often used to raise money for startups that use blockchain technology as part of their business. However, ICO’s involve new technologies that are highly complex, and you can lose some or all of the money you invest. It’s important to only invest what you can afford to lose.
If you are interested in investing or making a purchase with cryptocurrency, use the following tips to protect yourself:
• Educate yourself on the difference between cryptocurrencies and U.S. dollars, including the fact it does not have the same legal protections as U.S. dollars.
• Be wary of investing with companies promising big payouts or guarantees because the value of cryptocurrency can change hourly and can never be guaranteed.
• Be on the lookout for cryptojacking. This is when a scammer uses your devices processing power to “mine” or get cryptocurrency for themselves. Signs include slowing of apps and battery drainage.
• Do not say “yes” to cryptocurrency stock purchases from an aggressive cold caller, even if the claims sound plausible, particularly if the recommended stocks are very low-priced. Don’t feel guilty about hanging up. Not answering at all, or putting down the phone, are generally the best and safest responses to a cold caller or anyone aggressively pitching low-priced stocks or other investment opportunities.
• Expect you may not get immediate access to your cryptocurrency due to large volumes of customer requests. This could lead to increased losses or reduced potential gains.
• Report scams using BBB’s Scam Tracker at www.bbb.org. You can also report scams to the FTC at www.ftc.gov/complaint.
• Use trusted third-party resources, such as your Better Business Bureau, before doing business with companies.Visit www.bbb.org or call 937-222-5825 or 800-776-5301 to get Business Profiles on companies.
When considering investing or working with a company, you want guaranteed protection and quality service. With cryptocurrency, it’s hard to find those guarantees so it’s important to do your research and only invest what you can afford to lose.
The writer is the president and CEO of Better Business Bureau serving Dayton and Miami Valley.