Nashville, TN – During the first months of 2021, the Better Business Bureau (BBB)® has observed a rise in consumer reports to BBB Scam Tracker about cryptocurrency-related issues, as well as a spike in customer complaints about some cryptocurrency platforms. In both types of cases, consumers frequently say that they are unable to access or cash out their funds in crypto investment accounts.
“Consumers have increasingly sought out cryptocurrency investments as crypto continues to gain headlines,” said Robyn Householder, President, and CEO of BBB serving Middle TN and Southern KY. “Crypto scammers and shady platforms use dreams of financial success to attract consumers, which is why investors need to check out cryptocurrency opportunities very carefully before investing funds.”
Since the start of January 2021, there have been 160 reports to BBB’s online Scam Tracker tool regarding cryptocurrency scams. For the same three-month period in 2020, there were just over 50 reports.
Many of the consumers reporting crypto scams to BBB said they were solicited on social media to invest funds on websites.
These consumers said they were lured by the promise of a quick return on investment and were sometimes pressured to keep investing more after the initial amount. Problems allegedly began when the consumer tried to withdraw the money from the investment account.
Consumers reported that scammers used various tactics to prevent them from cashing out, such as charging commission fees or taxes, which would essentially wipe out the consumer’s investment. Several consumers said that they were not told about any fees or commissions when they were solicited to invest.
A few consumers reported that they submitted forms of ID to verify their accounts and expressed concern about the potential for identity theft by the scheme operators.
In addition to a rise in crypto scam reports, BBB has noted a spike in complaints in 2021 against cryptocurrency platforms.
Most of the complaints reported the inability to access the funds in the investment accounts. Complainants said that they could not withdraw or transfer their account funds. Many reported delays with account verification and communication from customer service representatives to help with their issues.
Some crypto platforms are reportedly experiencing an overwhelming level of interest in cryptocurrency trading and may be struggling to scale up to deal with the influx of activity. Other platforms are reportedly using questionable practices.
In collaboration with FINRA, the BBB Institute for Marketplace Trust and BBB have developed educational resources for consumers about cryptocurrency issues and fraud prevention. It is available at BBB.org/crypto.
Crypto scams and problematic crypto offers may involve different opportunities, including investment accounts with trading platforms and new forms of cryptocurrency.
Some tips for would-be crypto investors include:
- Take time. Investigate the potential investment thoroughly. Be sure you understand what kind of investment it is, what terms and conditions apply, and the risks involved. Look past dazzling promises the investment operator may be making, and seek hard information before sinking your precious funds into any offering.
- Be wary of social media messages or cold calls about a crypto investment. Heavy pushes to “invest now” are a red flag.
- Educate yourself on common scams. Crypto may be a new investment option, but scammers still use classic tactics to take your money. Look out for “pump and dump” schemes that make it look like a stock’s value is climbing rapidly until it crashes after you invest. Also, beware and general fraud, where the con artist takes your money and disappears.
- Know the platform. Even legitimate crypto platforms may experience customer service problems relating to high trading volume and scale-up issues that can occur when interest is high.
- Be aware that you might not be able to withdraw funds quickly, even from a reputable platform.
- Understand that cryptocurrency trading investments are not FDIC-insured or SIPC-protected.
- Research cryptocurrency companies at BBB.org and review scam reports at BBB.org/scamtracker to see what consumers have reported to BBB.
- Verify SEC registration. Verify whether any crypto-related offering of securities is registered as required with the U.S. Securities and Exchange Commission (SEC) Edgar system.
About BBB of Middle Tennessee and Southern Kentucky
For more than 100 years, Better Business Bureau has been helping people find businesses, brands and charities they can trust. BBB provides objective advice, BBB Business Profiles on more than 5.3 million companies, 11,000 charity reviews, dispute resolution services, alerts and educational information on topics affecting marketplace trust.
Visit bbb.org for more information. There are local, independent BBBs across the United States, Canada and Mexico, including BBB Serving Middle TN and Southern KY, which was founded in 1961 and serves 45 counties in Middle TN and Southern KY.
Visit bbb.org for more information.