In response to scams involving bitcoin ATMs that cost consumers more than $100 million annually, four Democratic senators have introduced the Crypto ATM Fraud Prevention Act.
The proposed law, spearheaded by Sen. Dick Durbin (D-Ill.), would prevent new users from spending more than $2,000 per day or $10,000 over a 14-day period to buy cryptocurrency from a bitcoin ATM, NBC News reports. Additionally, it would require that companies personally communicate with new customers attempting transactions exceeding $500 and offer full refunds to those who report fraudulent activity to the police within 30 days.
In the first half of 2024, consumers lost $65 million to scams involving bitcoin ATMs, according to the U.S. Federal Trade Commission. Adults ages 60 and older were more than three times as likely as younger adults to report losses.
At least 15 states are considering bills to curb these scams, according to Governing magazine. Most proposals would limit crypto ATM transactions to $1,000 per customer per day and cap fees at $5 or between 3% and 15% of a transaction’s value. At least three states—Minnesota, California and Vermont—already enforce daily transaction limits for bitcoin ATMs.
How the Scam Works
There are nearly 40,000 bitcoin ATMs across the U.S., according to Coin ATM Radar. These ATMs are often found at gas stations and retail stores, including the Midwest convenience store chain Kwik Trip, which offers customers the chance to buy bitcoin at more than 800 locations.
Criminals frequently target victims, typically older individuals, by posing as representatives from a bank or law enforcement agency. The victims are told they need to withdraw a large sum of cash from their bank to pay—such as for missing jury duty—and deposit it into a bitcoin ATM.
The victims are then instructed to scan a QR code or enter a warrant number associated with their case. In reality, these numbers are linked to the criminal’s virtual wallets, giving them access to the funds and making recovery nearly impossible.
The median reported loss across all age groups was $10,000, though losses can be significantly higher. Eric Calendine of the Beaufort County Sheriff’s Office in South Carolina told NBC News about a local retired couple who were misled for months into believing they were protecting their savings by depositing them at bitcoin ATMs. They eventually lost almost $390,000.
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