Rising Threat of Crypto ATM Fraud: How to Protect Yourself

Crypto ATMs, or BTMs, are increasingly common but also attract scammers. Victims often receive fraudulent calls urging them to deposit cash for their security, leading to significant losses. The rise in fraud cases has been alarming, with reported losses reaching $114 million in 2023. States are implementing stricter regulations, while BTM operators are enhancing security measures to warn users about scams. Users are advised to remain vigilant and sceptical of unknown callers, especially if pressured to act quickly.

Crypto ATMs, commonly referred to as BTMs, are becoming increasingly prevalent, surfacing in places like gas stations and grocery stores. These machines are generally used for converting cash into cryptocurrency or vice versa. However, with their growth comes a troubling rise in fraud cases targeting unsuspecting users.

Scammers often start their schemes with a phone call, claiming to be someone unknown. The story usually involves a fabricated emergency that requires immediate action, like depositing cash into a crypto ATM for security purposes. Unsuspecting victims receive a QR code via text, which directs them to send money to the scammer’s digital wallet. Peggy Herbert, a victim of this type of scam, lost a staggering $34,000 after falling for this trick, though she eventually managed to recover her funds.

Statistics show that BTM fraud losses have surged, nearly doubling year over year since 2020. According to data from the Federal Trade Commission, there were $114 million in reported losses in 2023, with $65 million occurring just in the first half of 2024. The typical loss for each victim hovers around $10,000, making this a significant and ever-worsening issue.

Regulations surrounding BTMs vary significantly by state. In Florida, for example, operators must register federally and adhere to anti-money laundering laws. A proposed bill, HB 319, would enforce stricter requirements on BTM operations, including clearer warning signs and measures for identifying high-risk transactions. California has already implemented daily transaction caps and mandated receipts.

On a federal level, U.S. senator Dick Durbin has plans to introduce new BTM regulations in the upcoming congressional session. In the meantime, customers at BTMs are met with warning messages cautioning them about potential scams and advising them not to share personal details with strangers.

NBC6 reached out to major BTM operators like CoinFlip, who provided some insight into their operations. A spokesperson mentioned that they engage closely with law enforcement to mitigate fraud, pushing for state oversight and shared standards aimed at consumer protection. They have instituted customer identity verification and displayed anti-scam messages before transactions as part of their precautionary measures.

Bitcoin Depot, another key player in the BTM space, echoed similar sentiments. They noted that their kiosks show multiple warnings during transactions, alerting users to avoid sending Bitcoin to unknown wallets. They also mentioned that suspicious activities are monitored and that cash is primarily accepted to reduce the risks linked to card fraud.

U.S. Attorney Roger Handberg is addressing BTM-related frauds after reports of scams where individuals were tricked into depositing large sums, such as $12,000, which was then promptly transferred elsewhere. Handberg emphasised the importance of heeding warning signs but warned that scammers are continually evolving their tactics.

To protect yourself from being scammed via crypto ATMs, keep a few key points in mind. Refrain from clicking on strange links and be cautious of unfamiliar phone calls. If someone is pressuring you to quickly secure your money, consider it a red flag. You should definitely contact the police if someone advises you to withdraw cash for a BTM deposit.