This page provides some pointers that can help in preventing fraud and scams associated specifically with bitcoin transactions. The advice given here should be regarded as additional guidelines, complementing the stanard guidelines for internet fraud prevention. Please google the terms 'use internet safely' to find these standard guidelines. On the website of the Federal Trade Commission you can find a number of useful tips to help you stay safe on the internet.
Bitcoin transactions are interesting for malevolent actors for the following reasons:
- bitcoin transactions are direct and fast
- bitcoin transactions are definitive and irreversible
- bitcoins can be spent globally
- bitcoin transactions are pseudo-anonymous
- converting bitcoins to euros is relatively simple and cheap.
There is a difference between the definitions of fraud and scams.
Fraud in this context is the situation in which the victim makes a transaction without realizing he or she is actually purchasing bitcoins. The fraudulent person might send an e-mail, supposedly on behalf of a company or a government service, mentioning an unsettled bill that needs to be paid. A link in the e-mail is presented as a way to pay the outstanding amount. In reality, a bitcoin purchase awaits. The victim clicks the link, is directed to an iDEAL webpage, and, while under the impression that he or she is paying the bill, actually purchases bitcoins that are sent to the fraudulent person. This is basically a form of phishing.
A scam is the situation in which the selling party asks for payment in bitcoins, but does not deliver the product. This sort of scam occurs a lot on advertising sites where people sell goods online. Another emerging form of scamming is the use of fake web shops that look very professional. These sites are often brought online just before the weekend starts and sell popular products just below their market value. The client is usually offered to pay with iDEAL, a bank transfer or with bitcoins. As soon as the client makes the payment (often to the bank account of henchmen), the amount is immediately converted into bitcoins and thus becomes untraceable.
Preventing fraud and scams with bitcoins
When should you be extra alert if asked to pay with bitcoins?
Bitcoin as the only payment method
At the moment, bitcoin is only interesting as an extra payment method in addition to regular payment methods. Be extra alert if bitcoin is offered as the only way to pay. If it is possible to pay by bank transfer, check whether the IBAN-number starts with NL. In any other case, chances are you are transferring funds abroad or to an anonymous bank account.
Transactions are checked more strictly when the transferred amount is higher.
Our extra checks are mostly based on so-called derived identification. A method often used is the penny check. We request the user to manually transfer 1 eurocent using a specific description, parallel to the regular purchase. That way, we can confirm that the purchase is actually done by a person authorized to use the particular bank account.
Do not respond to requests by unknown persons to transfer 1 eurocent and do not give anyone access to or information about transactions on your bank account.
Check the transfer description when making an iDEAL payment
The name of the recipient of the payment is shown when an iDEAL transaction is made. This name should match the one of the party you're making the payment to. Many web shops use the services of a payment provider (PSP) to process iDEAL payments (and other kinds of payments). In that case, the recipient is the payment provider. Sometimes the final recipient (the client of the payment provider) is also mentioned in the description. A list of payment providers officially licensed by the Dutch National Bank (DNB) can be requested via the link below.
Bank & WhatsApp fraud
WhatsApp regularly appears to be a vital part of large-scale fraud and scams. An increasingly common trend is abusing payment requests from banks and approaching victims via WhatsApp.
Sometimes the fraudster lets the victim covertly buy bitcoins via the payment request. In addition, fraudsters may also pretend that they are in contact with us, are employees at Bitonic or act 'on behalf of' Bitonic. This is never the case as we do not use WhatsApp for payments.
We want to emphasize that payment requests via WhatsApp are extremely risky and therefore do not recommend paying in this way. It is mainly a technical weakness in the payment requests combined with the simplicity and (misguided) confidence in payment and communication via WhatsApp.
This fraud is a variant of the WhatsApp fraud which has been in circulation for some time, it has similarities. Read here a Dutch police leaflet about this and remember:
Do you get a request for money via text?
Never pay until you have called back.
When in doubt
In case you have doubts, please contact us.
What can you do when you've become a victim of fraud or a scam?
Collect all correspondence and transaction data in a file. The following information can help the police or us to investigate the reported fraud:
- Copies or printouts of the fraudulent advert or website.
- If available, communication with the fraudulent person (mails, chat logs, recorded telephone conversations, combined with their time logs).
- Bank statement with the relevant bank transactions.
- Overview of the fraud-related bitcoin transactions.
Please contact us. The information you provide enables us to further analyze the reported fraud and to update our anti-fraud system.
Report the incident at mijnpolitie.nl and add the relevant data you collected. You may inform the authorities that you've also relayed this data to us. For more information on reporting internet fraud, please visit the Dutch government website at rijksoverheid.nl: what is internet fraud and where can I report this?
Anti-fraud measures performed by Bitonic
Bank account number verification
In order to make Bitcoin purchases we ask for a one-time verification of your bank account number. By transferring 1 eurocent to us, and using a specific description in the payment comment, you prove to us that you are authorized to make iDEAL transactions as well as regular SEPA transfers with this particular bank account.
A cooling-down period is applied for larger bitcoin transactions. This means we retain the bitcoins shortly and send them with a slight delay. The duration of the delay depends on the size of the transaction. Using a cooling-down period allows the bank or the payment provider to detect and report possible fraud.
Automated fraud detection
Most of our transactions are processed automatically. Some transactions may be marked as suspicious, based on their characteristics. These transactions will then be checked manually to ensure their legitimacy.
Fraud-related reports and all relevant information can be sent to: firstname.lastname@example.org.