The Consumer Financial Protection Bureau released a new bulletin today highlighting complaints the agency has received related to cryptoassets. Consumers most commonly reported being victimized by fraud, theft, account hacks and scams. Consumers also had issues with executing transactions and transferring assets between exchanges, while others had issues accessing account funds due to platform failures, identity verification issues, security holds or because of technical issues. Poor customer service was another common theme across crypto-related complaints.
Scammers often target cryptoassets because it can be difficult to determine the people behind many cryptoasset addresses, and there are a number of techniques scammers use to obscure the movement of cryptoassets to other accounts, according to the CFPB, which can make tracing stolen assets more time consuming. As price volatility and cryptoasset adoption has increased recently, there has been a similar rise in complaints received by the CFPB. From October 2018 to September 2022, the CFPB received more than 8,300 complaints related to cryptoassets, the majority in the past two years. For about 40% of cryptoasset complaints handled since October 2018, consumers listed frauds and scams as the main issue. Various transactional issues with cryptoassets accounted for about 25 percent of complaints, while issues with assets not being available when promised accounted for 16% of complaints.
The bulletin identified several common risk themes in analyzing cryptoasset complaints. Hacks by malicious actors have marred cryptoassets and led to significant financial loss by consumers with no recourse for recovering stolen funds. Other risks identified in the bulletin include: romance scams, where scammers play on a victim’s emotions to extract money; a romance technique called “pig butchering” where fraudsters spend time gaining a victim’s confidence, trust and romantic affection in order to get victims to set up cryptoasset accounts, ultimately to be stolen; attackers pretending to be customer service representatives to gain access to customers’ accounts. The bulletin also flagged difficulty obtaining restitution in situations where consumers have been defrauded; fraudulent transactions; and higher asset volatility, with cryptoassets showing significantly more fluctuation in value than government-backed currency.
