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MI AG, LARA, DIFS Share Cryptocurrency Consumer Alert
June 21, 2021
LANSING - Michigan Attorney General Dana Nessel, Michigan Department of Licensing and Regulatory Affairs (LARA) Director Orlene Hawks, and Michigan Department of Insurance and Financial Services (DIFS) Director Anita Fox are issuing a consumer alert to help Michiganders protect themselves when using (or investing in) cryptocurrency instead of currency issued by the U.S. Treasury.
The alert explains basics about digital currency, virtual currency and cryptocurrency as well as scams that take advantage of people unfamiliar with using digital currencies as a form of payment or investment.
According to a recent article from the Wall Street Journal, the value of the total cryptocurrency market is more than $2 trillion, up from $260 billion a year ago.
For anyone interested in investing in cryptocurrency, here are some important tips to keep in mind:
- Research before you invest. Search online using the company name as well as the cryptocurrency name; add "review", "scam", or "complaint" to your search.
- Never wire or provide any credit card or bank account information until you check out the investment first.
- Before using a digital payment app, such as Venmo, make sure you understand the terms and conditions of using and transferring different currencies through the app. Some may charge a fee when the user wants to transfer money to their bank.
- Be careful when you see a celebrity endorsement. Scammers will use popular names and faces for curb appeal.
"As cryptocurrency popularity grows, so will the prevalence of scams," Nessel said. "Bad actors running investment scams are always looking for new ways to target unsuspecting investors. It's so important to do your research before you invest in anything, including determining how and if you will have the option to transfer digital earnings to your bank. Otherwise, you may lose money instead of earning it."
"As with any type of potential investment, if a promoter guarantees returns, if an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost," Hawks said.
The Michigan Uniform Securities Act (MUSA), 2008 PA 551, provides for the regulation of the securities industry in Michigan. The Securities & Audit Division - within LARA - oversees the registration of individuals and entities that provide investment-related advice to Michigan residents. If a consumer wishes to file a complaint against a company that violated the MUSA, they may file a complaint using the complaint form available on the LARA website.
"Unfortunately, new innovations can sometimes inspire new scams, but good old fashioned vigilance can help protect you, your money, and your personal information," Fox said. "It pays to do your homework with reputable sources before initiating a transfer or giving out any personal information, and remember that if an offer seems too good to be true - it could be a scam."
DIFS regulates the insurance and financial services industries in Michigan. Consumers who need assistance with insurance or financial services issues can contact DIFS Monday through Friday from 8 a.m. to 5 p.m. at 877-999-6442 or file a complaint online. In addition to the tips provided in the alert, DIFS has this resource for consumers.
The North American Securities Administrators Association also has this helpful resource with additional information.
The Department of Attorney General provides a library of resources for consumers to review anytime on a variety of topics.
Your connection to consumer protection is just a click or phone call away. Consumer complaints can be filed online at the Attorney General's website, or by calling 877-765-8388.