Reghan Winkler: How to avoid scammers who love cryptocurrency

According to AAA.com, the national average price for gasoline per gallon rose from $2.469 in February 2021 to $3.469 on February 7, 2022. A nearly 41% increase.

The USDA.gov website says food prices rose 6.5% during the same time period, with an expected increase this year of an additional 4.5%.

It feels like the rate of everything is going up. Money just seems to rush out of our bank accounts with seemingly very little we, individually, can do about it.

There is one area, however, that has seen a rise of 79% over the last year, where we can do something to avoid losing money.

The Federal Trade Commission (FTC) recently issued an alert saying scams demanding payment by cryptocurrency had increased dramatically. CNBC.com reported scammers stole a record $14 billion using cryptocurrency last year, an increase over 2020 of 79%.

First, let me say, I am by no means a cryptocurrency expert, but I did find an explanation on the FTC.gov site that helped me with a basic understanding of crypto.

According to the FTC, cryptocurrency is a type of digital currency that generally exists only electronically. Bitcoin and Ethereum are well-known cryptocurrencies, but there are many other brands and more constantly being created. You can buy cryptocurrency through many online exchange platforms, similar to the way you may purchase foreign currencies when traveling abroad, usually using your phone or computer without the shield of an intermediary such as a bank.

You can even buy crypto through a cryptocurrency ATM. A cryptocurrency ATM allows customers to buy Bitcoin, Ethereum and other cryptocurrencies. The use of “ATM” is a misnomer. The machines are not actually ATMs and do not dispense cash. Rather, they are machines that connect to a cryptocurrency digital wallet and allow customers to purchase crypto with deposited cash. These ATMs are rarely operated by major financial institutions and do not connect customers to a bank account.

Scammers love cryptocurrency because there are no banks involved, it offers increased anonymity, nearly impossible tracing, and almost instant payment.

Even though they use crypto as the means of payment, scammers rely on traditional schemes such as IRS, Publishers Clearing House, law enforcement, online romance, or other scams to get victims to send them money.

Here is where crypto comes in. If the victims believe their story and seem willing to engage, scammers direct them to go to a store that has a cryptocurrency ATM and buy cryptocurrency. The fraudsters then send victims a QR code with their cryptocurrency digital wallet embedded in it and direct victims to scan the code, so the money is transferred directly to them. Poof! The victim’s money is gone.

Cryptocurrency payments do not come with legal protections. Credit cards and debit cards have legal protections if something goes wrong. Banks and credit card companies have processes to help you get your money back. Cryptocurrencies typically do not.

In a time where we feel as if we can’t control the increasing rate of many things, we can do our part to control the increase in cryptocurrency scams.

How do you avoid falling victim? Nobody from a legitimate government agency, law enforcement, utility company, or sweepstakes contest will ever tell you to pay them with cryptocurrency. If someone does, it’s a scam, no exceptions, every time. In fact, anyone who tells you to pay by wire transfer, gift card, or cryptocurrency is a scammer. Don’t do it!

Reghan Winkler is executive director of the Better Business Bureau serving West Central Ohio. The BBB may be found on the Internet at bbb.org/us/oh/lima.