Bitcoin ATM Scams Surge to 1,000% Since 2020 — FTC

The rise in Bitcoin ATM scams has reached alarming levels in recent years, with fraudsters increasingly targeting vulnerable populations, particularly older adults. According to the United States Federal Trade Commission (FTC), these scams have surged tenfold since 2020, exploiting the anonymity and rapid transaction speeds that cryptocurrencies offer. The FTC, along with industry leaders, is now sounding the alarm, urging consumers to exercise caution and take preventive measures to protect themselves from falling victim to these scams.

A Growing Threat

Bitcoin ATM scams have become a significant concern for regulators and the cryptocurrency industry alike. The FTC’s data reveals a staggering increase in reported incidents, with losses exceeding $110 million in 2023 alone. What’s particularly troubling is that consumers aged 60 and older are three times more likely to fall victim to these schemes, making them a prime target for scammers.

These scams typically involve fraudsters who convince unsuspecting victims to transfer funds through Bitcoin ATMs under false pretenses. Often, the scam begins with a phone call, email, or text message claiming to be from a legitimate organization, such as a government agency, law enforcement, or a well-known company. The scammer then creates a sense of urgency, telling the victim that they owe money, are at risk of legal action, or need to pay a fee to claim a prize. To resolve the issue, the victim is instructed to withdraw cash, visit a Bitcoin ATM, and send the funds to a provided digital wallet address.

Industry Response

In response to the rising number of Bitcoin ATM scams, industry leaders are stepping up efforts to educate and protect consumers. Bitcoin Depot, one of the largest Bitcoin ATM providers in the U.S., has implemented several measures to help users avoid falling prey to these scams. In an interview with Cointelegraph, a Bitcoin Depot spokesperson emphasized the importance of consumer protection and scam prevention.

“We post scam warnings on our kiosks and have screen prompts that warn customers of scam potentials,” the spokesperson explained. “We want our customers to be aware that no legitimate agency or company will ever demand payment in Bitcoin or other cryptocurrencies via a Bitcoin ATM.”

Bitcoin Depot’s proactive approach includes providing security tips to consumers, such as never sending Bitcoin or other cryptocurrencies to unknown digital wallets or individuals they don’t personally know and trust. The company also encourages users to verify the legitimacy of any transaction before sending funds, especially if they feel pressured or rushed by the person requesting the payment.

FTC’s Warning

The FTC has also issued strong warnings to consumers regarding Bitcoin ATM scams. According to the agency, no legitimate organization will ever ask for payment in Bitcoin or other cryptocurrencies through a Bitcoin ATM. The FTC urges consumers to be suspicious of any unsolicited requests for payment, especially if they involve cryptocurrency.

In a statement, the FTC highlighted the importance of staying informed and vigilant. “Scammers are using Bitcoin ATMs to exploit the speed and anonymity of cryptocurrency transactions, making it difficult for victims to recover their money once it’s sent,” the agency warned. “Consumers should be cautious and take time to verify the legitimacy of any transaction before using a Bitcoin ATM.”

Local Efforts to Combat Scams

The rise in Bitcoin ATM scams has also caught the attention of local governments, with some taking steps to regulate the industry more closely. On August 7, a local government committee in Chico, California, discussed potential regulations for Bitcoin ATMs. Andy Pickett, the chief administrative officer at the County of Butte, explained that the committee is exploring ways to treat Bitcoin ATMs more like traditional banks, with stricter oversight and consumer protections.

Pickett noted that any ordinance to regulate Bitcoin ATMs would need to be passed at the local level and would likely face legal challenges. “Each jurisdiction would have to pass their own ordinance to regulate Bitcoin ATMs, and any ordinance would likely be challenged in court,” he said. Despite the potential legal hurdles, local governments are increasingly recognizing the need for regulations to protect consumers from Bitcoin ATM scams.

Protecting Yourself from Bitcoin ATM Scams

As Bitcoin ATM scams continue to rise, both the FTC and industry leaders like Bitcoin Depot emphasize the importance of taking precautions to protect yourself. Here are some tips to help you stay safe:

Be Skeptical of Unsolicited Requests: If you receive a call, email, or text message asking for payment through a Bitcoin ATM, be skeptical. Legitimate organizations will not request payment this way.

Verify the Source: Before sending any funds, take the time to verify the identity of the person or organization requesting payment. Contact them directly using a phone number or email address you know to be legitimate.

Don’t Rush: Scammers often create a sense of urgency to pressure you into making a quick decision. Take your time and consider whether the request makes sense.

Never Send Crypto to Unknown Wallets: Only send Bitcoin or other cryptocurrencies to digital wallets that you know and trust. If you’re unsure, don’t proceed with the transaction.

Report Suspicious Activity: If you believe you’ve encountered a Bitcoin ATM scam, report it to the FTC and the Bitcoin ATM provider. This can help prevent others from falling victim.

The rise in Bitcoin ATM scams is a troubling trend that underscores the need for greater consumer awareness and protection. As scammers continue to exploit the anonymity and speed of cryptocurrency transactions, it’s crucial for individuals to stay informed and take steps to safeguard their assets. By following the advice of the FTC and industry leaders like Bitcoin Depot, consumers can help protect themselves from becoming the next victim of a Bitcoin ATM scam.

Get more from The Bit Gazette