With all the buzz about bitcoin, more people are now considering it as an investment opportunity. But with anything new and complex, con artists are there to take advantage. BBB Scam Tracker continues to receive numerous complaints from consumers fooled by phony bitcoin investments, often losing thousands of dollars.
Here’s how the Scam Works. You are looking to purchase bitcoin, so you search online. You find a legitimate-looking website that offers to mine the cryptocurrency, for a fee. (Unlike dollars, pesos or yen, bitcoins are not backed by a government or distributed by a central bank. Instead, bitcoins are created on the peer-to-peer bitcoin network through a process called “mining.”) The website asks you to pay upfront, and bitcoin will be transferred into your account. However, after you make the payment, nothing happens. Attempts to reach anyone at the website prove futile.
Other versions of this scam target investors trying to convert bitcoin to their local currency. For example, one consumer used a service to exchange bitcoin for US dollars and transfer the money into a PayPal account. However, the transaction didn't work as planned. "My bitcoin account showed that the transaction went through, but the transaction timed out," read the report.
Using virtual currencies comes with risk. Their value goes up and down - sometimes sharply - depending upon demand. In addition, payments made with virtual currencies aren’t reversible and don’t have the same legal protections as some traditional payment methods. Once you hit send, you can’t get your money back unless the seller agrees. That’s why it’s important to know who you’re buying from and what policies they have regarding refunds, returns, and disputes.
Review BBB online shopping tips. Many online purchase scams use similar tactics, and bitcoin is a growing payment method for scammers. See BBB.org/shoppingonline for more advice.
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