A report from the Federal Trade Commission (FTC) indicates a 1,000 % increase in money lost to scammers through Bitcoin ATMs in the last three years with consumers reporting losses of more than 111 million dollars last year. Bitcoin and other cryptocurrency ATMs look just like traditional ATMs, but instead of distributing cash, they take cash in exchange for cryptocurrency and enable the transfer of the deposited cash turned into Bitcoin into crypto wallets. Due to the anonymity and immediacy of the Bitcoin transfers done through a Bitcoin ATM, it is a favorite method of payment for scammers.
Most of the scams using Bitcoin ATMs involve imposter scams where the scammer poses as either a law enforcement officer, government official or someone providing tech support for a non-existent problem. What all of these imposter scams have in common is that they scare the targeted victim with a story about an emergency that requires them to take cash from their bank account and use a QR code provided by the scammer to deposit the money into the account of the scammer at a Bitcoin ATM under the guise of protecting the funds. According to the FTC, people over 60 years old were more than three times more likely to report losing money to a Bitcoin ATM scam with an average loss of $10,000.
Arizona state representative David Marshall has filed House Bill 2387 which would provide needed regulations for these cryptocurrency ATMs to help prevent people from being scammed. If passed into law, the bill would require warnings on the ATMs before the user could do a transaction. The warnings would also provide information about cryptocurrency scams. Additionally, the bill would require the ATMs to provide printed receipts that would include information useful to law enforcement in the event of a scam. The law would also limit the amount of funds someone could deposit into a new account or send in a 72 hour period. Scammers often require their victims to send repeated deposits. Finally, the law would require greater transparency in the operation of the ATMs. The bill passed unanimously out of committee and now goes to the Senate for consideration and eventually if passed by the House and Senate will become law when signed by the governor.
TIPS
Protecting yourself from these imposter scams starts with recognizing that you can never be sure who is actually contacting you when you are contacted by phone, email or text message so you should never click on a link, download an attachment or provide personal information in response to any of those communications unless you have absolutely confirmed that the communication was legitimate. Further there is no circumstance where you will be asked by anyone legitimate to withdraw funds from your bank, deposit them into a Bitcoin ATM and transfer the funds to them. Only scammers make those requests.
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