CFPB Warns Consumers About Bitcoin and other Virtual Currencies
By Consumers Union on Monday, August 11th, 2014
Last June we wrote about how the CFPB would be paying closer attention to virtual currencies. Today the CFPB issued a warning for consumers about risks of virtual currencies, such as Bitcoin, XRP, and Dogecoin. The CFPB says consumers should be aware of potential risks with virtual currencies such as unclear costs, volatile exchange rates, the threat of hacking and scams, and that if your funds are lost or stolen, virtual currency companies may not offer refunds or help to recover your lost funds.
What are virtual currencies? Virtual currencies, sometimes called crypto-currencies or digital currencies, are designed to be an alternative to current ways to pay. They are a way for consumers to track, store, and send payments over the Internet. They have the potential to make payment processing cheaper or faster but are not backed by any government or central bank and are not insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Share Insurance Fund.
How do virtual currencies work? Check out our blogpost from June for a great infographic on how Bitcoin and other virtual currencies work.
The CFPB’s virtual currency consumer advisory is available here.
If you have a problem with a virtual currency product or service, you can now submit a complaint to the CFPB.
Why complain to the CFPB? The agency will send the complaint to the appropriate company, and will work to get a response. If the complaint is about an issue outside of the CFPB’s jurisdiction, it will forward the complaint to the appropriate state or federal agency. The CFPB uses complaints to better understand the virtual currency market and its impact on consumers, and to help enforce federal consumer protection laws.
Do you have a story about an experience with a virtual currency? If so, tell us now in the Comments section below.