On November 10, 2022, the CFPB released a new complaint bulletin that highlights complaints the CFPB received related to crypto-assets. According to the CFPB, consumers most commonly reported being victimized by frauds, theft, account hacks, and scams. Other complaints include issues in executing transactions and transferring assets between exchanges, issues with accessing funds in their account and poor customer service.
From CFPB Director Rohit Chopra’s statement:
“Our analysis of consumer complaints suggests that bad actors are leveraging crypto-assets to perpetrate fraud on the public. Americans are also reporting transaction problems, frozen accounts, and lost savings when it comes to crypto-assets. People should be wary of anyone seeking upfront payment in crypto-assets, since this may be a scam. We will continue our work to keep the payments system safe from fraudsters targeting Americans.”
Crypto-assets are a private sector digital asset that depend primarily on cryptography and a distributed ledger or similar technology. According to the CFPB, scammers often target crypto-assets since it can be difficult to determine the person or people behind many crypto-asset addresses, and there are a number of techniques scammers use to obscure the movement of crypto-assets to other accounts. From October 2018 to September 2022, the CFPB received more than 8,300 complaints related to crypto-assets, with the majority of them received in the past two years. Based on the CFPB’s analysis, 40% of crypto-asset related complaints are composed of frauds and scams, 25% accounted for various transactional issues, and about 16% are issues with assets not being available when promised.
In the bulletin published by the CFPB, the Bureau identified several common risk themes in analyzing crypto-asset complaints. Hacks by malicious actors have marred crypto-assets, and led to significant financial loss by consumers with no recourse for recovering stolen funds. Other risks identified in the bulletin include:
Romance scams and “pig butchering”;
Difficulty obtaining restitution;
Fraudulent transactions;
Risk of identification; and
Higher asset volatility.
The CFPB advises consumer to:
Beware of common scams, including romance, “pig butchering” and merchant scams;
Report suspicious FDIC insurance claims; and
Submit a complaint with the CFPB.
Read the CFPB’s press release here.
The Complaint Bulletin can be found here.