Page 109 - Cyber Defense eMagazine January 2024

cryptocurrency favorably, and there are valid concerns to consider. For example, the Federal Trade
Commission warns that cryptocurrency payments lack the legal protections that accompany credit or
debit card purchases, particularly when disputing transactions. Traditional financial institutions and card
issuers offer mechanisms to recover funds, whereas cryptocurrency transactions are not reversible, even
in the case of fraud.

However, the finality of cryptocurrency transactions can offer a safeguard against chargeback fraud. This
type of fraud occurs when a customer falsely claims a transaction was unauthorized or defective before
seeking a refund from their bank or card provider. With the average cost per chargeback costing retailers
$128, the adoption of cryptocurrency could ease some of the financial burden stemming from these
fraudulent chargeback claims.

Nonetheless, while cryptocurrency may offer a deterrent to certain types of fraud, it does not eliminate
the risk of fraud. The digital wallets used to store and manage cryptocurrency are not immune to cyber
threats. Businesses can face the peril of their funds vanishing into the ether if these wallets fall prey to
hacking, sophisticated phishing attacks, or even flaws within the wallet software itself. Furthermore, the
decision to accept cryptocurrency payments could inadvertently lead customers to let down their
defenses, making them more susceptible to impersonation scams. In such scenarios, fraudsters might
masquerade as your business through text, emails, or phone calls, attempting to swindle cryptocurrency
from your customers. This tactic mirrors the deceptive practices seen in Amazon scams, where
customers are tricked into sharing their credit card information.

Cryptocurrency – like any innovation – is not a one size fits but it can offer great opportunities. For some
businesses, it could open the doors to previously inaccessible markets and offer a more inclusive financial
gateway for global customers. For others, the lower transaction fees associated with cryptocurrency could
translate into cost savings for the business. And for some, it may not be the right fit at all. Overall, it’s
important that businesses have the right defenses in place to prevent fraud and misuse of cryptocurrency,
and the following tips could help in that effort.

Protecting your business and customers

If you do choose to accept cryptocurrency payments, there are a few steps you can take to protect your
business and customers from fraud. It’s also crucial to consult with financial experts to fully understand
the implications for your business and any specific regulation in your area.

1. Be mindful about the coins you accept.

Being selective in the currencies you choose to accept can help you balance innovation with reputational
integrity. For instance, choosing to accept widely recognized and established currencies such as Bitcoin
or Ethereum, rather than more volatile or meme-driven coins like Dogecoin can align you with the more
stable end of the crypto spectrum. Although no digital currency is immune to the fluctuations inherent in
these markets, the broader market acceptance of leading cryptocurrencies may offer a semblance of
stability to your customers.

Cyber Defense eMagazine – January 2024 Edition 109
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