In conjunction with issuing a consumer advisory today on virtual currencies, the CFPB announced that it is now taking complaints about virtual currency products and services. The CFPB’s actions follows the issuance of a report by the Government Accountability Office in June 2014 in which the GAO recommended increased CFPB participation in interagency efforts related to such currencies.
In the CFPB’s press release, Director Cordray described virtual currencies as “stepping into the Wild West.”
The advisory explains virtual currencies and discusses associated risks that consumers should be aware of. (Bitcoin is the most well-known of the virtual currencies.) Such risks include unclear costs, volatile exchange rates, the threat of hacking and scams (including when a consumer’s bank account and virtual currency account are linked), the unavailability of help or refunds for lost or stolen funds from virtual currency companies, and the absence of government insurance for virtual currency accounts.
In November 2013, Mercedes Kelley Tunstall, who leads Ballard Spahr’s Privacy and Data Security Group, testified on virtual currencies before two subcommittees of the U.S. Senate Committee on Banking, Housing and Urban Affairs. Mercedes advises banking clients nationwide on payments and cybersecurity issues, including those involving virtual currencies. At the hearing, she addressed the commercial viability of digital currencies, regulatory options, and how to respond to other emerging virtual currencies.
The CFPB’s announcement that it is now taking complaints about virtual currencies represents the second expansion of the CFPB’s complaint system announced this summer. Last month, the CFPB announced that it had begun taking complaints from consumers about prepaid cards, such as gift cards, benefit cards, and general purpose reloadable cards, debt settlement services, credit repair services, and pawn and title loans.