(Undated) Cryptocurrency ATMs (sometimes known as crypto ATMs or Bitcoin ATMs) are playing a bigger role in scams than ever before. Data from the Federal Trade Commission shows consumers reported over $100 million in losses per year, and there are no signs that it is slowing down.
Scammers are capitalizing on the accessibility of these machines, and they are employing tried-and-true high-pressure tactics to entice Iowans into using the machines to transfer cash to digital wallets (accounts) the scammers control. It is important for consumers to understand what cryptocurrency ATMs are, how the scams work, and what Iowans can do to protect themselves.
What are Cryptocurrency ATMs?
A cryptocurrency ATM is an electronic kiosk designed to facilitate buying cryptocurrencies – generally by using cash or a debit card. These machines look like traditional ATMs and may be located in all the same kinds of places: gas stations, convenience stores, malls, grocery stores, and other high-traffic areas.
How Do Cryptocurrency ATMs Work?
You deposit money into the cryptocurrency ATM. The cryptocurrency ATM charges a fee and transfers the money into cryptocurrency and puts it into a digital wallet. You provide the address of the wallet.
Using Cryptocurrency ATMs to Facilitate Scams
While these machines are intended to allow consumers another way to access digital currencies, cryptocurrency ATMs are increasingly being used to facilitate scams, warns James Johnson, Superintendent of Banking with the Iowa Department of Insurance and Financial Services.
“The scams start through chats, social media, emails, texts, computer pop-ups and phone calls from strangers. The lies told by criminal scammers vary, but they create some urgent justification for Iowans to take cash out of their bank accounts and put it into a cryptocurrency ATM. In many cases, the scammer poses as a government official and instructs their intended victim that transferring their money is the only way to protect it,” said Johnson.
“When Iowans put their money into the cryptocurrency ATM, the machine converts the money to cryptocurrency. The way it is supposed to work is that the Iowan types in an digital wallet address that he or she controls, but as part of a scam, the Iowan types in the scammer’s digital wallet address or the Iowan is given a QR code to scan which points to the scammer’s digital wallet address. The cryptocurrency ATM then transfers the cryptocurrency to the scammer’s digital wallet. Once the criminals control the cryptocurrency, they quickly move it, making it virtually impossible to recover,” added Johnson.
How to Protect Yourself
The Iowa Department of Insurance and Financial Services recommends the following proactive measures:
-Never click on links or respond directly to unexpected calls, messages, or computer pop-ups. If you think it could be legitimate, contact the company or agency, but look up their number or website yourself. DO NOT use the phone number the caller or message gave you.
-Slow down – scammers want to rush you, so stop and check it out; before you do anything else, talk with someone you trust.
-Never withdraw cash in response to an unexpected call or message – only scammers will tell you to do that.
-Don’t believe anyone who says you need to use a cryptocurrency ATM to protect your money, fix a problem, or to get a great return on investment. Real businesses and government agencies never ask you to use a cryptocurrency ATM.
-Be cautious if someone tells you something is a secret, or information cannot be shared with others. This is a method used by scammers to isolate individuals from trusted resources. It is a red flag because it helps criminal scammers remain in control.
Bottom Line
Cryptocurrency transactions are designed to be anonymous and instantaneous. Most investment losses due to cryptocurrency investments are difficult to recover. In Iowa, operators of cryptocurrency ATMs are required to issue refunds under specific conditions related to fraudulent transactions. Consumers are required to report the fraud within 90 days and it must provide proof of the fraud to the operator, such as a police report or a sworn statement.
For additional tips and resources visit www.iowafraudfighters.gov. The website also includes videos of Iowans sharing their stories about how scammers took advantage of them. The scams that we are seeing in Iowa today are sophisticated. Listen to what your fellow Iowans have dealt with so that you are better equipped to protect your assets.
