IDB Global Federal Credit Union

Bitcoin and cryptocurrency as a whole have surged in popularity in recent years, which has caused cryptocurrency scams to rise as well. Since crypto is such a new concept to many people, this makes them more vulnerable to these kinds of scams than others. Getting a crypto refund can be very difficult — if not impossible – which makes it a particularly alluring field to operate in for scammers.

We’re here to help you protect yourself by spotting bitcoin scammers early. Here’s what to know about cryptocurrency scams.

Is Cryptocurrency a Scam?

Because of the nuanced technical nature of the blockchain, there is an extra layer of confusion which scammers can leverage to take advantage of unsuspecting victims. As a result, local bitcoin scams are on the rise.

While crypto itself is legitimate, it is rare that any legitimate business will demand payment exclusively in bitcoin (or any other form of cryptocurrency). Your credit union, for example, will never request payment in cryptocurrency. Any messages requesting bitcoin, ethereum, or other seemingly credible crypto coin claiming to come from a financial institution or a common online account(such as Amazon) should raise a red flag.

While using cryptocurrency has become an increasingly popular practice, it has not yet been regulated enough by the industry to become a default mode of payment for financial institutions or large corporations.

Bitcoin Fraud Protection

Any time an unsolicited message makes a request for bitcoin or another cryptocurrency for payment, this should raise some concern. A large number of bitcoin scams begin with a text message or email, claiming to be from a credit union, credit card company, or other secure financial institution. They often claim they are detecting possible fraudulent activity on your account – but a financial institution would never exclusively require cryptocurrency payment. This is only of benefit to scammers, due to the difficult refund process and tracing associated with cryptocurrency.

The FBI reports that cybercriminals will call targets posing as “fraud detection” team members from these organizations. If you did not initiate contact with your financial institution, it is always safe to hang up and call the official number for fraud prevention directly. If the call is legitimate, the representatives on the official line will have no issue accessing your account and discussing a flagged transaction. However, scammers will often require you “verify” your account in ways that may seem legitimate – but are actually handing over access to your account. It’s a good rule of thumb to be skeptical if financial entities are requesting information they should already have on file for your account, such as your social security number or past addresses.

Cybercriminals thrive on appearing credible while creating a sense of urgency, so that you will look less closely into any questionable requests. If anyone is pressuring you to act immediately, this can be another sign that you’re dealing with a scammer. Scammers can also “spoof” official looking phone numbers, such as 800 numbers which match the line of a bank.

This is why it is always safer to call back, rather than deal with an unsolicited call requesting your information. Financial institutions are used to this, and this should not result in any protest that you will be unable to reclaim funds or nullify an existing fraudulent transaction on your account.

Crypto Investment Scams

Since cryptocurrency is appearing more in the news as a new diversification in the portfolio of large businesses, investment scams surrounding bitcoin have become more prevalent. Be wary of any unsolicited contact from an “investor” or somebody claiming to have caught onto an opportunity surrounding crypto that seems too good to be true. As with traditional investment scams, any claims of large returns in the short-term should be looked at with a reasonable amount of scrutiny.

Facebook Marketplace Scams

As mentioned above, the main reason scammers use cryptocurrency is the difficulty to get funds back once they are sent. This affects purchases at a local community level, such as Facebook Marketplace. If a seller is requesting bitcoin as payment, a safer option would be to offer cash when you come to inspect the item in question. Since there is little record of a Facebook Marketplace transaction regardless, this would likely fulfill any needs the seller had by requesting crypto (provided they actually have the item and intend to sell it).

Recently Facebook freezed operations surrounding it’s digital crypto wallet, Novi. If pressured, you could always cite this as a reason you do not feel comfortable using cryptocurrency with Facebook transactions.

IDB’s “State of Cryptocurrency” Webinar

Members can watch our webinar recording to learn more about new forms of currency and how to build a portfolio for the future of money. Our speakers will give you the knowledge, insights, and required information for beginners and active traders to make informed decisions that best align with their investment goals.