November 10, 2022

CFPB: New Bulletin Published Analyzing Rise in Crypto-Asset Complaints

“Pig butchering” and other scams lead list of crypto-asset complaints

Today, the Consumer Financial Protection Bureau (CFPB) released a new complaint bulletin that highlights complaints the CFPB received related to crypto-assets. Consumers most commonly reported being victimized by frauds, theft, account hacks, and scams. Consumers also had issues with executing transactions and transferring assets between exchanges. Many consumers had issues with accessing funds in their account due to outright platform failures, identity verification issues, security holds, or because of technical issues with platforms. Poor customer service is a common theme across crypto-related complaints.

“Our analysis of consumer complaints suggests that bad actors are leveraging crypto-assets to perpetrate fraud on the public,” said CFPB Director Rohit Chopra. “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 (such as a blockchain) or similar technology. These assets are also commonly referred to as “virtual currencies,” “cryptocurrencies,” “crypto tokens,” “crypto coins,” or simply “crypto”.

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. This can make tracing crypto-assets stolen by fraudsters more time consuming for regulators and law enforcement.

As price volatility and adoption of crypto-assets has increased in recent years, there has been a similar rise in complaints received by the CFPB about these financial products. 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. For about 40% of crypto-asset complaints handled since October 2018, consumers listed frauds and scams as the main issue. Various transactional issues with crypto-assets accounted for about 25 percent of complaints, while issues with assets not being available when promised made up about 16% of complaints.

The bulletin 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:

The CFPB is advising consumers to:

For complaints to be published in the public Consumer Complaint Database, they must be sent to a company for a response. Many virtual currency complaints are not published in the database as a result.  Complaints are often referred to other regulatory agencies for handling. The CFPB shares complaints with FTC Sentinel and makes them available to government agencies via the CFPB’s secure Government Portal.  These complaints are also available to CFPB staff for review and analysis.

Read today’s Complaint Bulletin.

This post was originally published here.