CFPB Now Accepting Bitcoin Complaints, Warning Users

issues arise from the fact that virtual currencies aren't insured

CFPB Now Accepting Bitcoin Complaints
Image: Pixabay
August 12, 2014

Burned using Bitcoin? The Consumer Financial Protection Bureau (CFPB) is now accepting complaints from users of Bitcoin or other digital currencies.

potential risks

The CFPB is also warning spenders of the potential risks associated with the new currency model and those that have issues can now submit complaints to the agency. Along with working towards a resolution, the complaints will help the agency better understand the industry.

Bitcoin, XRP and Dogecoin are virtual or digital currencies that were designed to be an alternative to the current payment system. Users can track, store and send payments over the Internet, but the currencies are not back by any central bank or government. Virtual currencies aren't insured, so if a virtual currency company fails, the government won't cover the loss, like it would for U.S. dollars.

available worldwide

Despite this, virtual currency companies are opening worldwide. Virtual exchanges help customers buy or sell currency. Digital wallet providers act like banks where users can create accounts to store and manage their funds.

Bitcoin and the like are still uncharted territory, and officials at the CFPB warn consumers of the potential risks with using the currency.

Exchange rates for the virtual currency are still volatile with extreme highs and lows that could change daily. In 2013, the exchange rate of Bitcoins to U.S. dollars fell more than 60 percent in one day. In 2014 the rate dropped 80 percent.

Like with any bank, consumers should look into the costs associated with exchanges and digital wallet providers.

hacking and scamming threats

Virtual currencies aren't immune to hackers and scammers who pose serious security threats. If hackers get access to a Bitcoin user's private keys, they could clear the account. As mentioned, since virtual currencies are not insured, the government won't cover the loss. Scammers are also posing as legitimate Bitcoin companies to steal money from victims.

There is little to no regulation with the Bitcoin market, so some companies don't identify their owners, contact information or where they are located. Consumers who are considering entering the digital-currency world should find out how to get in touch with the company with which they'll be doing business. They should also find out their rights and what kind of liability, if any, the company will accept.

Consumers can submit a complaint about a virtual currency company, or any company, to the Consumer Financial Protection Bureau.

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