Crypto ATMs: Regulating the Unregulated

Scam artists have a shiny, new tool to take your hard-earned money, and while the nature of the scam remains consistent - often preying on our emotions or manufacturing a sense of urgency - the method of getting your money is evolving with technology. Instead of purchasing gift cards or transferring money through wire services, the use of crypto ATMs is on the rise, and they are popping up at convenience stores, gas stations and other high-traffic areas in your community.

Recent data from the Federal Trade Commission paints a troubling picture, indicating that scammers have successfully convinced individuals to deposit over $65 million into crypto ATMs in the first half of 2024 alone. Alarmingly, older adults have emerged as primary targets, with reports suggesting they are more than three times more likely than younger individuals to be targeted for such scams.

Why are crypto ATMs the new kid on the block when it comes to fraud? For one, the kiosks quickly move your cash into tough-to-trace cryptocurrency accounts owned by criminals. Also, they are largely unregulated. Unlike banks, which offer some protection, the decentralized nature of cryptocurrencies means that if you get scammed, it’s very hard to get your money back. This lack of consumer protection is a major concern.

As we look toward the 2025 legislative session, one of the top priorities for AARP is to advocate for the passage of legislation aimed at imposing essential safeguards around the operation of these ATMs to bolster consumer protection. While Washington does require licensing for crypto ATMs and some signage warning about scams, our state does not have an overseeing agency to regulate or enforce rules.

The proposed legislation aims to introduce a number of consumer protections, like establishing a daily transaction limit to prevent large sums of money from being withdrawn or deposited in a single day and requiring mandatory scam warnings displayed on the machines to alert users to the risks involved. Transparency regarding transaction fees would also be enhanced, allowing consumers to make informed decisions before proceeding with a transaction.

Furthermore, the legislation advocates for identifying a regulatory body that would be responsible for monitoring the operations of crypto ATMs. This agency would oversee the licensing process, conduct regular inspections to ensure compliance with state regulations and enforce existing rules to deter fraudulent activities. By implementing these measures, we can make it harder for criminals to exploit these machines and help keep your hard-earned money safe.

In addition to state oversight, you can help protect yourself by remaining vigilant. A request to pay money via a crypto ATM is a red flag that you may have stumbled into a scam. Legitimate businesses and government agencies don’t take payment through crypto ATMs.

If you spot or have experienced a scam, report it to the Federal Trade Commission (FTC) at reportfraud.ftc.gov and the Federal Bureau of Investigation’s Internet Crime Complaint Center at IC3.gov. The more information they have, the better they can identify patterns, link cases and ultimately catch the criminals. 

You can also contact the AARP Fraud Watch Network Helpline, 877-908-3360, a free resource, to speak with trained fraud specialists who provide support and guidance on what to do next and how to avoid scams.