Cryptocurrencies are increasingly giving customers and banks a hard time, according to the banking ombudsman.
In 2022, the Ombudsman for Banking Services and Investments (OBSI) responded to over 10,000 inquiries from the public. A 40% increase over one year, while 2021 had yet broken records.
• Read also: A cryptocurrency platform accused of money laundering
• Read also: Cryptocurrencies: here for good despite a 62% drop in twelve months
• Read also: What to remember from crypto news in 2022
The majority of inquiries are banking-related (up 56%), but investment-related inquiries were up 8% year-on-year, largely due to for cryptocurrencies.
“Fraud has increased a lot during the pandemic. Consumers seem less aware of the risks they take when dealing with people they don’t know. And as our world becomes more sophisticated and electronic, more people are transacting online, so there are more opportunities for fraudsters too,” says Mark Wright, Director of Communications at OBSI. .
Getting fooled by cryptos
Here is an example of the “new” complaints related to cryptocurrencies: “He is an investor who is not sure who he is dealing with. He is told: ”if you want to invest with us, we don’t do that in cash, we only do that in cryptocurrency”. So the investor goes to his bank, withdraws his money and buys cryptocurrencies and then transfers them to a fake account,” explains Mark Wright.
The cryptocurrency company where our investor buys this currency operates legally, the bank with which he deals to withdraw his money too. But when the investor gives his assets to others to invest – often in a fake account of a fake company – that’s where the money gets lost. And it becomes very hard to trace.
“When a bank sees a situation like this, where someone is withdrawing a lot of money for an investment, they raise a red flag. Unfortunately, most investors will say, “I know what I’m doing.” They don’t want to be told what to do with their money. But once the money is out of the bank, the bank can’t do anything for them,” says Mark Wright.
Regardless, customers usually turn to their bank and say, “Why didn’t you arrest me? says Mark Wright. It’s unfortunate, but that’s how it is, he adds. Banks mostly have systems that warn their customers in such situations, but customers often don’t listen, he says.
A new problem
Cryptocurrency complaints are entering a “new area” for the agency, according to Mark Wright. Since new regulations last year, several cryptocurrency sellers have chosen to become members of OBSI. “We therefore started from zero complaints related to cryptocurrencies last year to 52 already this year”, he specifies.