Use these Tips to Protect Yourself from Crypto Scams
Updated: May 23, 2022
In this article we’ll cover the current stats on crypto scams in the US, provide tips on how to avoid falling for a fraudulent scheme and explain why using a Bitcoin ATM is safe and secure.
Every year millions of Americans fall prey to scams. Nearly one in three were the victim of a phone scam last year and identity fraud alone cost consumers $56 billion, according to the 2021 Javelin Strategy & Research Identity Fraud Study.
COVID-19 has not helped. In fact, it has accelerated losses because the pandemic changed the way people shop, creating more vulnerabilities as digital payments became more popular.
But what about crypto fraud? That’s on the rise too. According to the Federal Trade Commission (FTC), people lost over $80 million to fraudulent cryptocurrency investment schemes from October 2020 to March 2021. That’s a 90.625% jump in fraud compared to the same time period the previous year. Only $7.5 million in losses were reported in 2019-2020, with the most vulnerable being people in their 20s and 30s.
The bad news for those who fall victim to a crypto scam is that unlike schemes where your credit or debit card is compromised, it is almost impossible to recover crypto funds due to the decentralized, untraceable nature of Bitcoin and other cryptocurrencies.
Crypto Asset Recovery, a New Hampshire-based firm that specializes in digital wallet recovery, estimates that only about 2.45% of lost cryptocurrency is recoverable. Charlie Brooks, Crypto Asset Recovery founder, recently told GOBankingRates that while cryptos’ inherent decentralization, paired with strong encryption, lend to a very secure system for stores of value – the nature of its decentralization also acts as an Achilles heel.
How do you Protect Yourself from Crypto Scams?
Beware of promises of huge returns on your investment. The cryptocurrency itself IS the investment. You make money if you sell it for more than you paid for it. Period.
Don’t pay in cryptocurrency. Bitcoin, Ethereum, Litecoin, Dogecoin and the dozens of other cryptocurrencies are not widely accepted in the United States. If someone insists you pay in crypto, odds are it’s a scam.
Do your research. If you get an unsolicited offer from an “investment manager,” it’s probably a scam. Only purchase crypto from a trusted source: a Bitcoin ATM, Coinbase, an exchange that specializes in cryptocurrencies, or your financial adviser.
Why Buying from a Bitcoin ATM is Safe and Secure
While Bitcoin ATMs (BTMs) may seem like a new fad, the truth is they aren’t new nor are they risky. BTMs have done billions of dollars of transactions since 2013. And BTM operators, like PowerCoin, have stringent internal compliance and control policies in place and follows all regulations pertaining to Anti-Money Laundering (AML) and Know-your Customer (KYC) laws. This includes taking photos of each customer that conducts business at the BTM.
Using a BTM is no riskier than using an ATM. However, it’s important that you take all the same precautions when using a BTM you’d take when pulling out cash from the ATM such as being aware of your surroundings, only using a machine that is in a location with good lighting and that you feel physically safe while performing the transaction.
It’s also a good idea to familiarize yourself with the process before purchasing crypto for the first time, make sure you are aware of the most convenient locations in your area and have a digital wallet set up to hold your crypto. If you don’t have a wallet, we recommend Hodl.
Interested in hosting a Bitcoin ATM in your business? Talk to a PowerCoin representative to learn more about PowerCoin and how our attractive and secure BTMs can help you differentiate your business from the competition by offering a high-demand product, increase traffic and attract repeat customers.
Give us a call at 888.971.3116 or email us at sales@powercoinco.com