According to the Better Business Bureau, as many as five North Carolina residents -- including three in Raleigh -- are reporting losses totaling $54,145 in schemes targeting investments in digital currencies like Bitcoin.
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"I felt violated, I felt really stupid, I felt like I should've known better," Jake St. Peter, a Raleigh web developer, told ABC11. "I can't believe how easy it is."
St. Peter said he first became interested in digital currencies because he saw it as "the future" in money transactions.
Indeed, digital currencies, of which Bitcoin is perhaps the most well-known, has no central bank, and is not traded by any registered brokers.
"In the existing banking infrastructure systems, it takes two-to-three days (for overseas transactions), and there are exorbitant fees attached to that," St. Peter explained. "With Bitcoin, we're talking in a matter of 10 minutes with just a fraction of the cost of typical services like Western Union."
He's not alone, of course, which is why on Friday, one Bitcoin had a value of $10,156.00.
"I saw the potential of its growth being literally what we could never have assumed," St. Peter said.
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Without a bank or broker, then, Bitcoin trades are done peer to peer, and St. Peter said he exchanged digital currencies in various social media chat groups.
A few months ago, he received a trade offer from the administrator of one such group, complete with the accurate picture and profile. St. Peter then proceeded to engage in the trade, and would eventually sell some currency worth $7,500.
As time went on, however, St. Peter would follow up and see no return in the exchange, and when he personally followed up with the administrator, he learned that someone had stolen the administrator's identity.
"With our Facebooks and our Twitters and our Instagrams that we're putting out there, we're painting a picture for the criminal to have a good understanding of what's going on and who does what," St. Peter warned. "That's something that needs to get brought back more into the equation is picking up the phone and calling the individual."
Adding to the frustration is the lack of available resources for St. Peter to seek help, including police.
"There's no chargebacks, there's no banks to call, the email, the coins, the currency was sent to his wallet, and he's been able to pull this off," St. Peter noted.
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According to the Better Business Bureau, there are five common e-currency/cryptocurrency scams targeting consumers:
- High-Yield Investment Scams. These scams attract consumers with promises of high interest rates on investments. They operate like pyramid schemes, which generate returns for older investors through revenue paid by new investors, as opposed to legitimate business activity and investments. Consumers will see small daily returns in their accounts, but eventually the returns stop and the scammers run off with all the investment funds.
- Bitcoin Wallet Scams. All users of Bitcoin require a "wallet" to store, send, and receive their currency. Sadly, scammers have discovered ways to create fake wallets and defraud consumers. These fake wallets are downloaded by consumers and operating within a few days. Once the deposit level reaches a certain limit, the funds are removed by the scammers and consumers are left empty-handed.
- Bitcoin Phishing Scam. These scams usually involve consumers receiving emails to inform them they have won or been gifted Bitcoins. In order to collect their e-currency, they must click on a link leading to a wallet, where their username and password is required. To the victim's surprise, the provided link is to a fake wallet site and scammers have now gained access to the victim's wallet and the Bitcoin held therein.
- Bitcoin Donation Scams. These are instances where scammers have created fake donation pages, asking consumers to donate in Bitcoin. Even when donating, it is necessary to research the cause, the charity, and the person behind it thoroughly before arranging the transfer of any e-currency.
- E-Currency Exchange Scams. E-Currency exchange scams are often linked to employment or advance fee loan scams. Consumers are sent funds via e-transfer, credit card, or check, and are asked to exchange the funds for Bitcoin. They are then instructed to deposit the funds in another Bitcoin account to pay for interest charges or office supplies (depending on the nature of the scam). Eventually, the initial payment is found to be fraudulent and the consumer is held accountable to pay for the initial funds that were transferred.
To better protect your investment and your identity, the BBB offers the follow tips for using e-currencies.
- If you decide to entrust funds to any digital investment service, ensure you thoroughly research the company. Find out whether they are properly incorporated, registered, and operated by reputable industry professionals. Look for information about their marketplace reputation on bbb.org. If any company guarantees you high returns, be cautious. There is never any certainty in the investment world.
- Avoid using any wallet or exchange holder that is not reputable or professionally operated. Look online for reviews, complaints, and community feedback. Avoid companies offering exceptionally low fees.
- Be suspicious if you receive a notice for a transfer of funds that you were not expecting. When in doubt, contact the sender to confirm that he or she has initiated your transfer.
- Examine the links in the emails you receive. While scammers often use a legitimate website in the text of the email, holding your mouse over the link will reveal the actual URL.
Anyone who believes he or she might have been the victim of a scam -- cryptocurrency or otherwise -- should file a complaint with the BBB, as well as the North Carolina Attorney General's Office. The number for the AG is (877) 5-NOSCAM or you can file the complaint online at ncdoj.gov/complaint.