Authorities warn about surge in Bitcoin ATM scams

New forms of currency can open the door to new forms of fraud, and Bitcoin ATM (BTM) scams are on the rise, according to data from the Federal Trade Commission (FTC). November will mark two years since the crash of the third-largest cryptocurrency brokerage platform, FTX, due to a large-scale fraud that cost its investors millions, but the FTC is now warning of an altogether different type of swindle: smaller in scale and directed at ordinary people, especially the elderly. It’s a scheme that has scammed the unsuspecting out of a total of $66 million in the first half of this year, and that’s only the reported cases.

Last year, the losses amounted to $114 million, 10 times more than in 2020. Authorities believe that these amounts are only a fraction of the total because most cases go unreported. The FTC describes as “enormous” the growth of these operations perpetrated through BTMs installed in 24-hour convenience stores, gas stations and other urban areas. BTMs can be used to buy or send cryptocurrencies.

The average reported loss per scam is $10,000, an amount that would seriously impact a family’s finances. According to the authorities, people over the age of 60 are three times more likely to report falling victim to this scam than younger people.

How does it work?

There is no single script, but in most cases the victim receives a call or text about unauthorized spending from their account or other suspicious activity such as unauthorized transfers. In other cases, a security alert is sent to the victim’s computer on behalf of Apple or Microsoft. This is followed up by a phone call from someone masquerading as a representative of a government office or even the FTC itself. The victim is told that the money in their account is at risk or that their accounts are being used by criminals in money laundering operations, drug trafficking and other crimes.

Next, the scammer encourages the victim to deposit their money in a BTM for safeguarding. According to the FTC, these BTCs are known as lockboxes. “They ask the victim to go to their bank, take the money out and go to a nearby or specific BTM to make the deposit. The victim will receive a QR code to scan into the machine via text and once that happens the money will go directly into the scammer’s pocket,” the FTC states.

Distinguishing legitimate calls and text messages from scams is becoming increasingly difficult, even for experts. And remaining alert is a job that is becoming increasingly more complicated.

The FTC recommends that you never open a link to a web page that has been sent to you, or respond to unsolicited calls or texts that appear on your cell phone. If you think a message about non-payment of your last electricity bill may be genuine, call the utility company directly, but use the phone number you have for the company, not the one provided in the text. Never use the telephone number or the web site attached to the message.

Keep in mind that government agencies will never call you on the phone if they have not contacted you by letter first. Callers that claim to be the police, IRS, FTC, SEC or any other agency, without any written legal communication or visit, are fraudulent.

A line such as “we have been trying to contact you for several weeks now without success to warn you that we will be cutting off your electricity supply tomorrow due to non-payment” should ring alarm bells. The urgency of the supposed situation aims to prevent the victim from having time to verify the allegations or even think straight and suspect they may be fabricated.

There is no banking emergency that will be solved by transferring your money to a Bitcoin ATM or via a prepaid card or gift card. No business or state agency is ever going to ask you to do anything similar. As soon as a caller makes such a suggestion, hang up, stay as calm as possible and congratulate yourself on the fact you have just escaped becoming a victim of a scam. If you suspect you are a victim, report the scam to the police and the FTC at ReportFraud.ftc.gov.

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition