PROTECTING YOUR FINANCES
Cryptocurrency has moved from the fringe to the mainstream. You’ve likely heard stories of the newest crypto coin, with names like Bitcoin, Ethereum. Ripple, and Dogecoin, promising big returns for buyers. And certainly your inbox has been hit with phony get-rich-quick scams involving crypto. Because it’s new and has limited regulations, it’s the new favorite playground for scammers.
Let’s get a quick overview of crypto currency so you can understand the basics and protect your money.
What is cryptocurrency?
Cryptocurrency is a form of digital money that exists online. It isn’t issued by a government, backed by gold, or held at a bank. Transactions are recorded on a blockchain (a digital ledger), and the crypto itself is typically stored in a digital wallet.
Scammers like crypto transactions because they’re fast, irreversible, and usually anonymous.
Common cryptocurrency scams
Like many fraudulent schemes, crypto scams fall into similar categories.
- Too-good-to-be-true promises
Scammers claim to have insider knowledge of guaranteed, amazing, risk-free returns on your cryptocurrency investment. They often impersonate legitimate crypto platforms or well-known figures like Elon Musk to get you to click.
- Romance and relationship scams
Scammers use dating apps and social media to start a phony relationship. Over several months, they gain your trust and claim to fall in love before sharing a once-in-a-lifetime investment opportunity. But you’ll have to act fast, or you’ll miss out.
- Imposter schemes
Fraudsters pose as customer support agents, government officials, or even bank representatives. (Note: Flagstar Bank will not call you with a crypto investment opportunity.) The scammer claims there’s a problem with your account and you need to move funds NOW to protect them.
- Giveaway and airdrop scams
Congratulations! You’ve “won” free crypto, even though you didn’t enter a contest. All you need to do is pay a fee to unlock your payout, which never arrives.
How to protect yourself from crypto scams
A few simple habits can significantly reduce your risk of many types of scams, including ones involving cryptocurrency.
- Treat guaranteed returns and urgency as red flags of a scam.
- Don’t take financial advice from strangers or someone you recently met online or through a dating app.
- Double-check website URLs to make sure they’re legitimate.
- Download apps only from official app stores.
- Do not share your crypto wallet keys, passwords, or one-time codes with anyone. (Flagstar will never call you and ask for this type of information.)
- Don’t let their pressure tactics get to you. Take a moment to think, and you’ll realize the pressure is fake and you’re dealing with scammers.
What to do if you think you’ve been scammed
Act quickly. Crypto losses can be hard to recover, but you may be able to limit the damage. Follow these steps:
- Stop all contact with the scammer.
- Change the passwords on your accounts and set up alerts.
- Report the scam to the Federal Trade Commission at reportfraud.ftc.gov.
- If you used a Flagstar account or debit card to fund the transaction, contact us immediately. Also, sign into online banking and turn off your debit card.
Finally, don’t let embarrassment stop you from reporting scams. You’re dealing with global crime rings that are excellent at stealing money. Reporting helps protect others and may help law enforcement spot patterns.
A little knowledge and a healthy dose of skepticism can go a long way toward keeping your finances safe.
