On August 15, Russia launched its pilot digital ruble project involving a range of clients from 13 Russian banks. It will take another two or three years before the digital ruble will be widely implemented. However, with so much media hype, scammers are already plotting their digital ruble scams. It may be tricky to avoid traps, so let’s look deeper into what the digital ruble actually is, how it works and what scams have already been reported, along with potential future threats and ways to protect ourselves.
What the digital ruble is and how it works
The digital ruble is the third form of the national currency that will be issued in addition to cash and non-cash rubles; individuals and companies will use special digital wallets to store their digital money. Users will be able to open such wallets (accounts) on a Bank of Russia platform and access them through any usual channel such as the financial institution where they are serviced, online banking and mobile apps. All the allowed transactions with the digital ruble will be conducted in your bank’s mobile app. Cash can be added to your digital wallet through ATMs if what you have is cash, at a 1:1 rate. You will actually debit the money to your bank account and then transfer it to your digital wallet. If you have non-cash money, you just go to your digital wallet and replenish it from your bank account. Digital rubles can only be transferred to users who have digital wallets.
Can digital rubles be stolen?
The issuer of the digital ruble, the Central Bank, promises that the digital ruble platform will have powerful protection against various types of attacks. But no high security will help if you give your digital rubles to other people voluntarily. Digital currency users will need to keep in mind the same risks as with non-cash rubles in commercial banks. The most common threats to be aware of are malware, phishing, and social engineering. The latter two are manipulation techniques that involve deceiving the victim. The intruder is less likely to succeed with a bank client who has high fraud-risk awareness and enough caution.
Current and future scams
Even before the launch of the pilot project of the digital ruble, scammers started distributing newsletters presenting themselves to be the official representatives of the regulator. These messages say that the Russian state cryptocurrency has been launched and people – potential victims – are invited to invest in it as a promising asset whose value will keep growing. In reality, scammers simply take the victim’s money. The scammed user receives nothing and risks their confidential data if it was given to the fraudsters.
Even though less than a month has passed since the launch of the pilot project, scammers have already implemented several schemes. Given the already accessible operations with the digital ruble, they began telling people that all money will become virtual and to save it, they need to transfer it to some “safe” account. Citizens are also offered to use the digital ruble for personal needs and to receive the currency, they must transfer real money.
Another scheme is when scammers, pretending to be bank officials, suggest that people take part in an experiment urging them to transfer their money to a digital ruble platform and promising them an earned commission. They also suggest that people exchange their savings to the digital ruble at a profitable exchange rate.
As you see, scammers’ imagination is inexhaustible. So, we can assume that the following schemes will be used in the future:
- Scammers present themselves as bank employees and say that the victim must convert all of their savings into the digital ruble otherwise the money will be frozen and confiscated. The victim’s money is transferred to the scammers’ accounts.
- Fraudsters offer to buy digital rubles with a discount. The victim transfers the money but receives either nothing or some fake digital tokens that have nothing to do with the real digital ruble.
- Scammers place an ad on a classified ads website, such as Avito, offering to buy expensive goods from a person for digital rubles, and transfer scam tokens to the victim claiming those to be digital rubles. Then the deceived victim sends an expensive item by mail.
How to recognize and avoid online scams
The Central Bank has warned that no official email newsletters on the digital ruble are ever sent by banks, and particularly by the Bank of Russia. Any offer to carry out digital ruble transactions should be considered fraudulent activity. Most often, fraudsters become more active during periods of media hype and information noise. Yet, to slightly paraphrase a well-known proverb, trust the Central Bank but always rely on yourself.
Even an obviously bogus fraudulent scheme does not mean scammers cannot deceive you. Below, you will find a few “red flags” of scams and tips to avoid them.
The first thing that should trigger alarm bells in your head is when they personally contact you. Do you remember when you last called a bank or a government agency and reached them instantly, with no wait? And here we have an employee who has initiated the call. In this case, the easiest way is to ask them for the full name of the organization, the employee’s full name and position, and then call them back using a public number to find whether this employee actually works there and the issue they have approached you with is relevant.
The second red flag is them speaking to you about money. Once again, when we finally get through and reach the organization, our problem is rarely solved through a single call; in the best case scenario, a solution can be found remotely, but sometimes your personal presence is simply necessary. Therefore, you should always keep in mind that you are the one interested in earning more money. Any strangers offering you schemes for quick money-making or investments should make you wonder about their true motives and actual reasons behind their actions – and their sole motivation is to get your money.
Another red flag is them asking for your confidential data. Any cunning attempts to obtain personal account logins, passwords or one-time authorization codes sent by banks always mean they are trying to get access to the money in your bank account. When a bank notices a suspicious transaction, you will be contacted to approve or reject it – and they will never ask for confidential information.
To avoid scammers, always follow certain ‘cyber hygiene’ habits. As to protecting bank accounts, most current cases of stealing money have occurred through social engineering techniques rather than due to cyberattacks on banks. In other words, fraudsters succeed in deceiving people, who transfer money to the former or provide them with access to their accounts while being completely clueless about it. You should understand that regardless of whether this is about a bank account or a digital wallet, you should never share any of your confidential data, such as passwords, PIN codes, or account and wallet numbers, with other people. These basic safeguarding rules will keep your digital ruble account safe.
By Alexei Chechukevich, crypto investor, founder of the Making Money With Crypto and CryptoMaster educational projects