Although most consumers have yet to purchase or use cryptocurrencies, they are interested and aware of crypto, paving the way for near-term growth as technologies supporting cryptocurrency transactions continue to mature. Some consumers see cryptocurrencies as a promising new investment asset that could even be used as collateral for loans, while others are interested in crypto because of the promise of security and convenience. increased confidentiality.
Despite this growing interest, most consumers do not understand cryptocurrencies very well, which leaves them vulnerable to scams. Cryptocurrency fraud poses additional risks to consumers compared to other forms of electronic payment fraud, as transactions cannot be reversed and even regulators are limited in their ability to track the parties involved in a transaction.
Therefore, to realize the full potential of cryptocurrencies, consumers, providers, and regulators will need to work together to promote security and reliability in the space. In the last Digital Fraud Tracker®PYMNTS examines the steps taken to make cryptocurrency more secure and accessible to help drive mainstream adoption.
Developments in the world of digital fraud
An increase in reported scams and crypto-related claims to the UK’s Financial Conduct Authority (FCA) demonstrates growing interest in crypto among consumers and growing awareness of the risks involved. Three thousand of the 16,400 possible scam reports submitted to the FCA between April and September last year were related to cryptocurrencies. During the same period, usage of the FCA’s ScamSmart warning list for cryptocurrency fraud-related inquiries increased by 49% over the previous six-month period. The ScamSmart tool lists purported investment opportunities that have been flagged as scams.
Although concern over cryptocurrency scams may have increased among UK consumers, there has not been a concomitant increase in tolerance for overzealous fraud protections when to drive electronic transactions. Part of this may be related to consumers overestimating their ability to spot and avoid scams. Only 6% of UK consumers are worried about authorized push payment fraud or being tricked into sending money to a scammer. Meanwhile, 19% said the biggest irritation is when their financial institution (FI) blocks a transaction they’ve authorized, and 35% said declining an online transaction three or more times would lead to consider changing supplier.
Read more about these stories and other digital fraud developments in Tracker’s News & Trends section.
Wirex on Cryptocurrency Maturation and Risk Management
From crypto-linked debit cards to stablecoins pegged to existing fiat currency, technologies enabling the use of crypto as a trusted way to conduct everyday transactions are on the rise.
In this month’s report, Tony Lees, chief product officer of the crypto platform Wirextalks about the unprecedented growth in use cases for cryptocurrencies that have accompanied efforts by providers and platforms to make them more accessible, as well as the misconceptions and fraud issues that prevent some consumers from getting engage with crypto.
PYMNTS Intelligence: Coping with Cryptocurrency Risks as Interest Rises
Thirty-eight percent of consumers believe that cryptocurrencies will be widely accepted for daily transactions over the next 10 years, and 86% are at least aware of crypto. Yet only 16% have ever purchased or engaged with a cryptocurrency. As the latter figure increases, lack of familiarity with cryptocurrencies could significantly increase consumers’ exposure to fraud. Most cryptocurrency scams take a form similar to other types of fraud, promising unrealistic returns or generally preying on human vulnerabilities rather than technological vulnerabilities.
This month’s PYMNTS Intelligence examines the role of providers, regulators and consumers in ensuring that cryptocurrencies continue to mature as transactional currencies while mitigating the risk of fraud.
the Digital Fraud Tracker®, made in collaboration with Data Visor is your go-to monthly resource for updates on digital fraud prevention trends and changes.