Arizona Cracks Down on Crypto ATM Scams

I don’t think this is going to work, but I don’t think it will do any harm.

Arizona, the stereotype goes, is where old people go. People who are less cyber literate and much less crypto literate.

How does the scam work? The hacker contacts a potentially susceptible mark and gives them some cock and bull story. Maybe it is a relative who needs money or a government agency threatening them about an overdue payment. Whatever the hook is, from there it is the same.

They send the mark to a crypto ATM – one that converts cash into crypto. There are around 600 of them in Arizona alone. From there, the mark feeds lots of hundred dollar bills into the ATM and gets a Bitcoin wallet ID. By the time they get home, the wallet is empty and the money is gone.

Arizonans lost $177 million to crypto scams last year and that is just what was reported.

The cryptocurrency kiosk license fraud prevention law does a couple of things. Some useful, some useless and some novel.

One, it lowers the daily limit for the amount of money the mark can convert to crypto. Not sure how that works statewide and whether the mark could just be directed to a second or third atm to convert more money.

Second, it requires more warning stickers on the ATMs. I doubt that will make any difference.

Lastly, and I think this is the novel one. It makes the crypto ATM owner liable for the mark’s losses if the mark said there was fraud involved. This “skin in the game” should motivate ATM owners to be more motivated to figure out ways to protect people.

Americans lost more than $5 billion to crypto scams in 2023 – the majority of victims were elderly. That is just what was reported. Even the FBI says the number is many times that amount.

These scams prey on fear and panic – and also lack of knowledge. The defense is straightforward. IF you can get there in time. Talk the mark off the ledge. Confirm that the fake recipient did not send the request – whether that is a child, a relative, a government agency or whomever. I heard of one case recently where the mark was converting money at a convenience store ATM and the clerk called 911. There happened to be a cop nearby and the cop was able to play the scammer so the mark did not lose any money and the scammer, well, it was not a good day. Wasted a lot of time and got nothing.

Unfortunately, a lot of these scams operate out of places like Myanmar, so getting help from the cops is not easy, but recently even the Chinese were not happy with them and they raided one compound of scammers – and these are major operations with dozens or even hundreds of satellite dishes and many hundreds of scammers, many in forced labor. They took the scammers back to China with the blessing of the local government. I would not want to be them once they got back to China.

But this is barely a start. This scam technique is very, very lucrative. But you have to start some place.

Credit: Route Fifty

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