Bitcoin Theft

The FBI is warning of a rise in Bitcoin ransom scams in which scammers use scare tactics and extortion to squeeze money out of victims in the form of Bitcoin payments.

“Fraudsters are leveraging increased fear and uncertainty during the COVID-19 pandemic to steal your money and launder it through the complex cryptocurrency ecosystem,” the FBI warns.

a gold coin etched with the Bitcoin "Capital B with vertical strokes" and circuit traces in the background

Unfortunately, the cryptocurrency payment leaves no room for reclaiming the lost funds. Here’s all you need to know about these scams and how to best protect yourself.

How the scams play out
In some Bitcoin ransom scams, scammers hijack an email address associated with a business website and contact a client of the business. The email informs the victim that a hacker has found a vulnerability in the company’s website and is holding the victim’s data hostage until a Bitcoin payment is made for its release. The victim, fearing monetary loss, may comply with the scammer and make the payment. In reality, though, the scammer has only hacked into the company’s email database. They have no access to the customer’s sensitive information.
While the scammer can hijack any website that has access to clients’ sensitive information, financial institutions like Advantage One Credit Union, are especially vulnerable to this scam. We utilize strict protective measures, like encryption and updated security software to protect our members’ information, but fraudsters may still try to scam members by persuading them that their data is at risk of being exposed.

In another variation of the Bitcoin ransom scam, scammers use “sextortion” to take the victims for money. They’ll claim to have evidence of the victim engaging in questionable internet usage and threaten to share this information with the victim’s contacts unless a ransom payment is made immediately. Some criminals have taken this scam a step further during the COVID-19 pandemic. In addition to the threat of releasing the information they supposedly have on the victim, they’ll also promise to infect the victim and their family with the coronavirus unless a payment is sent to a Bitcoin wallet.

Protect yourself
Fortunately, ransom scams are easy to spot. If you receive an email allegedly sent from a business you use, and it contains a message similar to what’s described above, do not respond. You can contact the company yourself to ask if there has been a data breach. You will likely learn there has not been any sort of breach within the company.

Similarly, if you receive an email threatening to expose your internet usage history and/or to infect you or your family with the coronavirus, do not respond. Mark the email as spam and delete it promptly.

If you’ve been scammed
Unfortunately, cryptocurrency transactions pose an extra risk by being absolutely final. There’s no way to cancel a cryptocurrency payment, back out of a purchase or trace the Bitcoin wallet to its owner.

However, if you believe you’ve been targeted by a Bitcoin ransom scam, you can help prevent others from falling victim by reaching out to the appropriate authorities.

If the scammer posed as representatives of Advantage One Credit Union, be sure to let us know! We’ll send out a warning to all of our members and caution them not to respond to any emails claiming to have hacked our database or to have accessed our members’ sensitive information. If the scammer is posing as a representative of a different company, it’s a good idea to let them know about it, too.

It’s equally important to alert law enforcement agencies about every scam attempt. The FBI’s Criminal Investigative Division has a team that’s dedicated to preventing and fighting cryptocurrency laundering and fraud. If you are the victim of a cryptocurrency scam or you’ve been targeted by one, be sure to contact your local FBI field office or visit the bureau’s Internet Crime Complaint Center . You can also alert the Federal Trade Commission at FTC.gov.

Many people are struggling with financial hardships due to the economic fallout of COVID-19. Unfortunately, scammers are trying to make a difficult time even harder by extorting victims for money. Stay alert and stay safe!

Your Turn:
Have you been targeted by a Bitcoin ransom scam? Tell us about it in the comments.

Learn More:
consumer.ftc.gov
bitcoin.com
fbi.gov

 

All You Need to Know About Going Cashless

Woman in cafe paying for coffee with her mobile phoneAs our world grows increasingly digitized, more and more consumers are banishing the cash and coins from their wallets and choosing other ways to pay for their purchases. There’s no lack of alternative payment methods today, from credit and debit cards; to electronic payment apps like Zelle, PayPal and Venmo; to mobile payment wallets like Apple Pay and Samsung Pay; to cryptocurrencies like bitcoin. You may be thinking about following the masses and getting rid of your cash. Or maybe you’re wondering if every transaction in the country will soon be digitized.

We have answered all of your questions about going cashless on a societal and personal level.

What if the entire country went cashless?
Futuristic as it sounds, many people believe our country will soon be completely cashless. They point to the growing number of consumers who rarely touch cash, and claim it won’t be long before the government discontinues the printing of paper money. If that happens, cash would have no value and every vendor, from plumber to dry cleaner to pizza deliverer, would need to have a way to process electronic payments.
In truth, there’s no indication of the government considering this move anytime soon, but, if it ever comes to pass, society would be deeply affected on many levels.

Here are just a few ways society stands to gain by eliminating cash:

  • No anonymous transactions for funding black markets. Most illegal transactions, like the purchase of recreational drugs and unlicensed weapons, happen with cash. Digital transactions always leave a trail, and getting rid of all paper money can significantly curtail the viability of these black markets.
  • Fewer white-collar crimes. Similarly, money laundering and other white-collar crimes will be more difficult to pull off without the availability of cash.
  • No cash management. Printing money, storing it and transferring large amounts of cash all costs money. These expenses will be eliminated along with cash.
  • Easier international payments. If every developed country accepted cashless payments, there’d be no need to exchange your money for local currency when you visit a foreign country.

On the flip side, there are serious concerns associated with the possibility of a completely cashless society. Here are just a few of them:

  • Increased risk of fraud. With everyone paying for every purchase through digital means, hackers have a much wider pool of victims to choose from. Plus, if your accounts are hacked in a cashless world, you’d have no way to pay for anything.
  • Lack of privacy. When every transaction happens online, your personal choices are no longer personal.
  • Inequality. A cashless society is unfair to the poor and unbanked. Without mobile devices for digital payments, or even a credit card, they’d have no way to make purchases.
  • Extra fees. While eliminating cash management might save some money for businesses and financial institutions, there’s no guarantee that payment processors and peer-to-peer payment apps won’t cash in on their sudden rise to significance and start charging higher fees for every transaction.
  • On a personal level
    Regardless of whether the country goes cashless anytime soon, you can decide to lighten up your wallet and pay for every one of your purchases with a mobile wallet or debit or credit card. You may choose to do so for the incredible convenience of cashless payments, or maybe you like the way you can effortlessly track your expenses with cashless payments.

However, before you get all hung up on the idea of going completely cashless, consider these important personal benefits of holding onto some of your cash:

  • Multiple studies show that most people spend less when paying with cash. One such study, performed by MIT and published by Carnegie Mellon Magazine, proved that card-swiping diners spent 42 percent more in a fast-food place compared to cash spenders.
  • Cash is free. Card transactions and digital payments often come with fees to help the retailer offset their cost of the transaction. Cash, however, is always free to use. Some retailers, like gas stations, even offer a discount for consumers paying with cash.
  • Some vendors only accept cash payments. You may not be able to shop everywhere or use the services of every vendor if you go completely cashless.
  • Cash always works. Cards and digital payment processing rely on electrical power and/or internet service. Cash always works, and it can really come in handy in case of a power outage. If you went completely cashless, something as simple as a dead phone battery could render you penniless.
  • There’s no risk of fraud. The worst thing that can happen to you when you’re carrying cash is getting pickpocketed and never seeing that money again. Contrast this to the very real risk of identity theft that every card transaction inherently carries and it’s a no-brainer: Cash is generally the safer way to pay. (Of course, care should be taken to conceal your cash and keep it in a safe place away from nimble fingers.)

Right now, the future of cash is anyone’s guess, but as our society grows more digitized, cash is becoming increasingly obsolete. Whatever personal choice you make about carrying cash, consider the various safety factors involved before making your decision.

Your Turn:
How do you feel about a cashless society? Share your thoughts with us in the comments.

Learn More:
moneyunder30.com
thebalance.com
usatoday.com

Cryptocurrency Hacks

A man and a woman using laptop computers at a kitchen tableCryptocurrency is all the rage. Money you can’t see? Online accounts that aren’t regulated by big banks or even the feds? It has a futuristic feel, and anyone and everyone seems to be buying into the trend.

Lots of those folks who are buying up bitcoins by the hundreds claim cryptocurrency investment is the ticket to a richer tomorrow. But security experts think otherwise. They’ve repeatedly warned that all cryptocurrency is extremely vulnerable and at risk of being hacked – and that includes yours.

Is cryptocurrency the wave of the financial future, or is it really as risky as experts would have you think?

Before making your decision, read on to arm yourself with all the information you’ll need about cryptocurrency hacks.

How it works
Cryptocurrencies are decentralized and unregulated. That means there is no single country or institution controlling bitcoin, Ethereum or Litecoin. These currencies are, consequently, extremely volatile and vulnerable to risk. Since all cryptocurrency transactions are processed online, a hacker can simply break into crypto exchanges, drain people’s wallets and disappear without a trace.

As you may expect, hackers have been following the meteoric rise of cryptocurrency and are eager to cash in on the prize. They’ve been systematically frauding the system for years, and have only gotten bolder over time. In the most recent major heist, hackers made off with an incredible $530 million in cryptocurrency from Coincheck, the leading Asian bitcoin exchange, this past January.

And experts predict that it will get worse.
An Ernst & Young report studied 372 preliminary coin offerings between 2015 and 2017 and found that more than 10% of the funds were stolen, amounting to as much as $1.5 million a month.

It’s not only individuals who’ve been defrauded; the report shares that huge companies have lost several million dollars on hacked cryptocurrency.

According to Chainalysis, a risk management software company for virtual currencies, more than 50% of these hacks occurred through phishing.

In other instances, hackers have modified malware to redirect bitcoins to their own wallets during a trade or purchase. This scam is particularly nefarious because the hackers snag the victim’s exchange credentials and login information so they can gain complete control of the mark’s bitcoin wallets.

By extension, this means the hackers have also accessed the victim’s credit card information and can do untold damage to their credit score while racking up huge bills in the victim’s name.

Any way you slice it, cryptocurrency hacks pose a major risk to all investors and users.

Who’s paying?
Nearly 20% of bitcoin investors purchase their cryptocurrency using a credit card – and almost 25% of them cannot pay off their credit card balance after making this purchase.

Some credit card companies are ready to throw in the towel on cryptocurrency. They’ve had their fair share of headaches caused by cryptocurrency hacks aimed at their cardholders, including disputed charges, fraudulent transactions and the inability to pay for large purchases.

Earlier this year, many major credit card companies, including Discover and Capital One, announced they will no longer allow cardholders to purchase cryptocurrencies using their credit cards due to the high level of risk and potential fraud associated with such transactions.

Lots of financial institutions have followed suit with similar announcements, claiming the increased volatility poses a loss to the institution, which may be forced to pick up the pieces for their member if a cryptocurrency investment or purchase is hacked.

Are cryptocurrency exchanges government-regulated?
The short answer is no. The very attraction of bitcoins and Ethereum is that they are decentralized, answering to no institution or government.

A little digging reveals that some foreign countries, like China, are actually taking stronger approaches toward protecting their citizens from cryptocurrency fraud and are coming down hard on all scammers and hackers.

For the average U.S. citizen, though, when it comes to cryptocurrency, you’re on your own.

Protecting yourself
Cryptocurrency transactions pose an extra risk by being absolutely final. There’s no way to cancel a cryptocurrency payment, back out on a purchase or secure an anti-fraud guarantee from a reputable financial institution. In case of fraud, you may be able to trace the computer that was used for robbing you, but it’s nearly impossible to identify the scammers that took off with your money.

In other words, by using cryptocurrency, you’re putting yourself at significant risk. There’s no one protecting you and no way to undo the damage once you’ve made a payment that’s been hacked.

The only thing you can do is take proactive steps to be as careful as possible when engaging in crypto-payments:

1.) Stick to established, recognized exchanges, like Coinbase.

Only use exchanges you’ve heard of, and only those that utilize two-factor authentication.

2.) Don’t store too much digital currency online.

It’s best to store your money as actual greenbacks in a brick-and-mortar financial institution. You can keep some cash in your wallet or even hoard it in a home safe, but be careful not to put too much in an online digital exchange.

3.) Keep your OS and security software up-to-date.

Always accept and install the most recent patches and updates when they become available. To ensure your system doesn’t fall behind, elect to have it update automatically.

4.) Be wary of suspicious emails and links.

Never share sensitive information over the internet, no matter how sincere or urgent an email or link may appear to be. Don’t download anything from an unverifiable source, and keep your spam settings working at their strongest capacity.

Cryptocurrency may be the dollar bill of the future, but don’t fall prey to the many criminals who are counting on consumer naivety to make a quick buck. Use caution and be on guard to keep your money safe!

Your Turn:
Do you use or invest in cryptocurrencies? What precautions do you take against hacks? Share your own tips with us in the comments!

SOURCES:

https://www.google.com/amp/s/www.nbcnews.com/business/business-news/amp/hidden-dangers-buying-virtual-currency-go-beyond-simple-hack-n852706

http://money.cnn.com/2018/01/29/technology/coincheck-cryptocurrency-exchange-hack-japan/index.html

https://www.fool.com/investing/2018/01/29/after-the-biggest-cryptocurrency-hack-ever-bitcoin.aspx

What are Online Currencies?

Bitcoin and other online currencies, explained

man holding gold bitcoins in his upturned palmsIn the past several years, one of the most confusing terms to appear in the financial world has been “online currency” or, more specifically, “cryptocurrency.” Some bear seemingly silly names, such as the internet-meme-inspired Dogecoin, but the most famous, and certainly the most discussed, is Bitcoin.

However, the question remains: just what are these online currencies?

The basics
As TechRepublic points out, there are a few terms commonly used interchangeably for online currency, but which have different meanings. The first is “virtual currency” or “online currency,” which was identified by the U.S. Department of Treasury as operating like traditional currency but without legal tender. The European Central Bank defined it as unregulated digital money, usually under control of its developers, and used among specific online communities.

The second term is “digital currency,” which is a virtual currency that is created and stored electronically.

The third term is “cryptocurrency,” i.e. a digital currency which uses cryptography for security to make it difficult to counterfeit. This most specific subset, of which Bitcoin is the best example, is notable for not being issued by a central authority.

Cryptocurrencies are the most-used online currencies and have gained significant traction with established merchants as well as individuals. However, security is a higher risk. CNN Tech points out that Bitcoin in particular is stored either on a personal computer, where the coins can be accidentally deleted or destroyed by viruses; or the cloud, which can be hacked.

Value of these currencies, according to Bitconnect, is affected by a large number of factors, such as supply and demand and its utility, but is made “because people think it has value and use it as a unit of exchange.”

The reasoning
According to a paper published by the creator or creators of Bitcoin under the pseudonym Satoshi Nakamoto, one major reason for the creation of cryptocurrencies is to eliminate the need for a “trusted third party” in online transactions, which for the most part are financial institutions. This also eliminates transaction fees and the need to share personal information along with the currency, which previously was needed to ensure trust between the buyer and seller.

More plainly, this means a transaction that only involves the buyer and seller with no associated handling fees, which can be performed entirely anonymously.

The sources
To describe where these currencies come from, we will stick with Bitcoin, as the most widespread cryptocurrency.

According to CNN Tech, Bitcoins are generated by a process known as “mining,” where people use computers to solve complex math problems with specific, open-source software. In this way, the more powerful a computer is, the faster is can “mine” for the specific number of possible Bitcoins—although, as TechRepublic points out, this process places high demands on hardware power and uses a lot of energy, leading some groups of people to pool the power of their computers and share the resulting profits.

The future
The future of these online currencies is presently unclear. Bitconnect points out that the value of online currency faces significant legal and governmental issues, as most countries have yet to form legal precedents relating to them. Some have even banned their use, or given them an official status so that they can be taxed as income. In general, regulations surrounding online currencies are still in development.

Meanwhile, the future within the cryptocurrency community, which according to Investopedia uses over 700 different currencies, is also uncertain. Wired explains that there is a growing movement to merge all of the online currencies with technology that would allow each to interact with one another, known as the “interledger protocol.” This is led by the company which oversees the cryptocurrency Ripple, with support from Microsoft and the World Wide Web Consortium. In essence, this would allow one person to send any currency and have it arrive as any other currency.

In any case, online currencies are clearly not about to disappear, and could potentially have a great effect on the future of worldwide commerce.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.