Bitcoin ATM scams: What you need to know

In the first six months of 2024, Americans lost $65 million to Bitcoin ATM scams. The machines offer an easy way for people to get into cryptocurrency, and they’re increasingly showing up in grocery and convenience stores, gas stations, smoke and vape shops, and laundromats across the country.

Their growing accessibility, plus the lack of consumer protection and industry regulation, make the cash-receiving kiosks an appealing target for scammers, says John Breyault, vice president of public policy, telecommunications and fraud at National Consumers League.

Take, for example, a Houston area man who recently received a phone call from a thief impersonating law enforcement. The scammer told his victim that he’d failed to report to jury duty and had an active warrant for his arrest, according to the NBC News affiliate Click2Houston. The only way the victim could get out of legal trouble? By depositing cash into a Bitcoin ATM at a nearby grocery store.

“They were pretty sophisticated and pretty adamant that, you know, you couldn’t get off the phone, it had to be dealt with right now,” the victim, who was only identified by the first name of Loyd, told Click2Houston. By the time Loyd had finished putting money into the Bitcoin ATM, he’d lost nearly $60,000.

Breyault says that Bitcoin ATM scammers are incredibly skilled at convincing their victims to part with their cash. Although consumers older than 60 are more likely to be targeted, the median loss in these schemes across all ages is $10,000, according to the Federal Trade Commission. The agency issued a warning about Bitcoin ATM fraud in September, noting that losses have increased nearly 10-fold since 2023.

Breyault says scammers are so successful because they get “people into such an emotionally agitated state that they’re not able to make rational decisions.”

In order to prepare consumers for that possibility, Breyault shared basic information about how Bitcoin ATMs work, whether victims can recover their losses to a scam, and warning signs that you’ve become a target. The FTC, which has its own list of similar tips, says that if anyone sends you to a Bitcoin ATM, it’s a scam.

How do Bitcoin ATMs work?

As cryptocurrency went mainstream, companies that sell it began to place Bitcoin ATM machines in heavily trafficked stores and businesses, says Breyault. While the number of machines varies depending on the source, one estimate published by the Federal Reserve Bank of Kansas City puts the figure at about 49,000.

Before the spread of those kiosks, customers needed tech savviness to create and access cryptocurrency accounts. The ATM machines make it much easier to deposit cash and purchase Bitcoin. But unlike traditional ATM machines, Bitcoin consoles don’t typically allow withdrawals.

The companies that operate the machines lease a business’s space, much like banks do to place their ATMs in front of consumers. However, the rapid appearance of Bitcoin ATMs has far outpaced consumer protections and education. For example, the machines inconsistently feature signs warning customers about fraud. Victims may also be told to ignore such messaging.

When scammers direct their victims to a Bitcoin ATM, they usually give specific instructions to create a new account and then to provide the thief with the QR code or digital key that provides them access to the cash. Victims may also be told to deposit the money into an established account.

Breyault says employees of stores and businesses that host Bitcoin ATMs often don’t have training to spot scams underway, or the know-how to intervene. One victim was even offered a chair to sit in while spending hours stuffing thousands of dollars into an ATM, according to a story reported by AARP.

Can I get my money back from a Bitcoin ATM scam?

Once the money is deposited into an account, and the thief has the digital key to access it, the cash can be moved to another account almost instantly. This makes recovering the victim’s money nearly impossible, Breyault says.

He adds that this is largely because cryptocurrency is loosely regulated. As a result, it’s subject to “weak” fraud controls. Unlike fraudulent credit card spending, which banks try to flag immediately, and which can be recovered, there are no such consumer protections for Bitcoin scams.

While federal legislation could change that in the future, scammers are currently taking advantage of the “insecure technology,” Breyault says.

“Nobody is immune to this,” he adds. “What’s important to stress is that these are professional criminals. This is what they do all day, every day. They’re very good at it.”

The FTC advises consumers who’ve lost their money to a Bitcoin ATM scam to inform their bank or fund immediately, then report it to the agency.

Warning signs of a Bitcoin ATM scam

1. Requests to deposit money into a Bitcoin ATM

The biggest red flag is when someone asks you to deposit money into a Bitcoin ATM. This might seem like it casts too wide of a net, but Breyault says that consumers should be skeptical of any such request — even from someone they feel like they know and trust, and have met in person.

That’s because some Bitcoin ATM scams involve grooming victims over time. Colloquially known as “pig butchering,” like an animal being fattened before slaughter, these schemes start as online friendships or romances in order to build trust. The thief might eventually talk about crypto investing, or say they need help paying for an unexpected expense, but it’s a scam designed to empty the victim’s bank account.

Even if you’re comfortable with crypto and have an account of your own, Breyault recommends never sharing your private key with anyone.

“That’s like handing cash to them,” he says.

2. The person you’re talking to has created a sense of urgency

If someone you’re talking to, whether they’re a stranger or person who feels like a friend, is insisting that you deal with a problem immediately by taking money out of your bank account, it’s likely a scam, Breyault says.

Common tactics include telling the victim that they have to act now or they or a loved one will be jailed because they violated the law; that a government agency, like the Internal Revenue Service, will come to their house; or that a “risk-free” crypto deal is only available for a very limited time.

“If you are feeling pressured to act quickly, no matter how you say they make the situation sound, stop and ask a friend or a loved one,” Breyault says.

3. The person knows a lot about you — and seems legitimate

Scammers can be very persuasive when they seem to know a lot about their victim, including where they live. But Breyault says that a lot of that information is publicly available or can be obtained via data breaches or for a small fee from data brokers.

Recently, for example, scammers have used publicly available pictures of people’s homes to pressure victims in Bitcoin sextortion schemes.

Scammers can also spoof phone numbers and email addresses to make it seem like they’re contacting the victim from an official government agency. Breyault recommends people avoid trusting communication from seemingly legitimate sources when they involve urgent demands for money and information.

4. Promises for big returns on a Bitcoin investment

Some Bitcoin ATM scams revolve around offers to invest in cryptocurrency that will lead to massive financial gain. Breyault says scammers use traditional marketing tactics, offering limited-time deals or insider knowledge. Those promises are almost bound to be lies.

Breyault recommends only getting involved in cryptocurrency as a “sophisticated” investor who’s prepared to lose money.

If you suspect you’ve been targeted by or you’ve become the victim of a Bitcoin ATM scam, Breyault says to report it to law enforcement.

Doing so helps them create a record, spot trends, and “hopefully put some of these bad guys behind bars.”