Bitcoin scam victim? How to tell the feds.
If you鈥檝e been scammed by offers involving Bitcoin, Dogecoin or XRP, the U.S. government wants to know. Ditto if you鈥檝e lost out on transactions involving any form of digital currency.
The Consumer Financial Protection Bureau added the Internet-born scrip to the lengthening list of products and services under its watchful gaze, asking Americans to submit complaints about issues related to virtual money in all its forms.
The agency will take up the matter with the provider involved and try to get a response, according to a notice聽聽on its website. As complaints collect, the bureau said the database they form will be used for law enforcement and in considering whether additional policies are needed.
鈥淲hile virtual currencies offer the potential for innovation, a lot of big issues have yet to be resolved 鈥� some of which are critical,鈥欌�� the agency said in an accompanying public聽.
Hackers and scams
Concerns listed in the agency鈥檚 notice include:
Potential losses聽鈥� The threat of hackers and theft from uninsured virtual wallets and other repositories, which can wipe out the holdings of affected consumers.
Fraud threats聽鈥� Scam artists that capitalize on the buzz surrounding Bitcoin and other digital currencies have cheated consumers with false offers and phony services.
Transaction costs聽鈥� Spending virtual money can be tricky, with exchange rate and conversion costs potentially making it more costly to use than credit or debit cards.
Consumers that engage the services of a digital wallet provider or a Bitcoin repository can find themselves stuck with little recourse should something go wrong, the bureau pointed out in the notice. 鈥淭hat company may not offer you the kind of help you expect from your bank or debit or credit card provider,鈥欌�� it said.
In a widely publicized incident, a Japanese Bitcoin exchange known as Mt. Gox froze customer accounts in February and its website disappeared from view, taking about $400 million worth of the virtual currency with it, the bureau said. Those who lost money could only sue for compensation in bankruptcy court later, and none have had their funds even partially restored, the agency said.
Wild fluctuations
Digital currencies like Bitcoin, Dogecoin and XRP were created outside the normal monetary system and aren鈥檛 backed by any nation or central bank, so can鈥檛 be readily converted into cash. Because their value is wholly dependent on the market for the virtual money, which only exists on the Internet, rapid changes in exchange rates can dramatically affect a holder鈥檚 wealth.
Already this year, the value of a Bitcoin has plummeted as much as 80% in a single day, the agency said. That would鈥檝e left a holder of $500 in Bitcoin in the morning with just $100 in the currency at the end of the day, and nothing to show for the missing $400.
Digital currencies were created as a way to store value independent of any nation鈥檚 money and to provide a system for anonymity in monetary transactions. Yet the bureau cautioned consumers that the way Bitcoins, for instance, are registered and exchanged may leave enough digital footprints that a diligent investigator could determine a user鈥檚 location and the amount of virtual money held by that person.
The bureau said in July it was adding prepaid cards, services for debt settlement and credit repair, and pawn and title loans to the list of financial services it was watching and asked for consumer鈥檚 to register complaints about them as well. It has also focused on overdraft fees, payday loans, mortgage and credit card聽.
So if you鈥檝e been mugged by a digital currency scam, sound off. Maybe something will be done about it.
聽image via Shutterstock
