Crypto ATM Scammers

An FBI announcement has warned that scammers are now directing victims to use physical cryptocurrency ATMs and digital QR codes to complete payment transactions.

What Are Cryptocurrency ATMs?

A cryptocurrency ATM is a physical kiosk/terminal/device that connects to a cryptocurrency network (e.g. bitcoin) and allows customers to purchase crypto tokens with deposited cash. Cryptocurrency ATMs are connected to the Internet and can use QR codes to send and receive tokens to users’ digital wallets. The UK, for example, already has bitcoin ATMs in many cities, for instance there are 50 in London and 10 in Manchester.

What Scams?

The FBI’s warning relates to scams that are using impersonation schemes, where the scammer falsely identifies as a familiar entity, for example the government, law enforcement, a legal office, or a utility company. Scammers are also using romance schemes (establishing a fake online relationship with a victim), and lottery schemes where scammers falsely convince victims that they have won a prize and need to pay lottery fees.

How Do The Scams Work?

According to the FBI, regardless of the scheme, the methods using cryptocurrency ATMs and QR codes appear similar. The scammer requests payment from the victim and directs the victim to withdraw money from their financial-accounts (e.g. bank or investments). The scammer then provides a QR code associated with the scammer’s cryptocurrency wallet for the victim to use. The scammer directs the victim to a physical cryptocurrency ATM to insert their money, purchase cryptocurrency, and use the provided QR code to auto-send the money. Reports indicate that the scammer is in constant contact online with the victim, providing step-by-step instructions until the payment is completed.

Why Cryptocurrency?

The reasons why the scammers are using cryptocurrency are:

– The decentralised nature of cryptocurrencies makes them very difficult to recover.

– The transfer is immediate. As soon as the victim makes the payment, the recipient instantly owns the cryptocurrency and can immediately transfer the funds to an account overseas (making it even more difficult to trace).

– It creates extra hurdles for the police/law enforcement agencies in trying to recover the funds.

Protection

Ways to protect yourself from falling victim to this type of scam include:

– Never send payments to a person you have only spoken with online.

– Don’t respond to callers claiming to be representatives of a company where you are an account holder, and who request personal information or demand cryptocurrency, or to callers from an unknown telephone number who request cryptocurrency.

– Don’t respond to anyone who says they can only accept cryptocurrency and (for example) identifies as the government, law enforcement, a legal office, or a utility company.

– Avoid anonymous cryptocurrency ATMs as they may be used for money laundering.

– Report any such calls to ‘Action Fraud.’

What Does This Mean For Your Business?

Cryptocurrency ATMs are still uncommon in the UK, but crimes such as romance fraud are quite widespread and for victims in large UK cities it’s only a short step before this type of scam is operated on a bigger scale. The story also illustrates how manipulative and ruthless scammers can be if the return is rewarding enough. Since the big increase in remote working during the pandemic, the UK has seen a huge rise in various scams. In June, for example, Citizens Advice reported that more than two-thirds of UK adults (36 million) have been targeted by a scammer since January, and that 12 per cent were offered a fake investment or ‘get rich quick’ scheme.

There was also a very sad report from Citizens Advice Consumer Service of an elderly man who contacted the charity after he sent £240,000 to an account he thought belonged to his bank. Fraudsters prefer vulnerable targets but anyone, if caught off-guard, is a potential victim. It is vitally important, therefore, that experiences of scam calls/texts/emails are shared, and suspected scams are reported to Citizens Advice and Action Fraud so that the nature of the scams can be identified which can lead to the fraudsters being stopped.

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