Bitcoin ATM Scams: How to Identify and Avoid Them

Regulatory bodies and law enforcement agencies are worried about more fraud and Scams involving Bitcoin ATMs. These machines let people buy and sell Bitcoin with cash and are meant to make digital financial services easier to use.

With over 34,000 Bitcoin ATMs worldwide, these kiosks can help people who don’t have access to traditional banks and depend on cash. However, scammers are taking advantage of this increased access.

In this article, we’ll look at Bitcoin ATM scams, point out common warning signs, and see how blockchain analytics can help reduce the risks.

Key Takeaways

• Bitcoin ATM crime has surged since 2020, with over 34,000 machines worldwide.
• Scammers have become increasingly sophisticated, resulting in significant financial losses.
• Common scams include pig butchering, romance, impersonation, and computer “Anti-Virus Protection” scams.
• Scammers exploit trust, fabricate urgent situations, and direct victims to Bitcoin ATMs to steal funds.
• Watch out for unsolicited contact, promises of high returns, urgency, and requests for too much personal information.
• Stay alert, avoid pressure, be skeptical of advance payments, and verify information if you suspect a Bitcoin ATM scam.
• CoinTime prioritizes security, follows regulations, and offers a clear interface to protect users.
• If scammed, contact the Bitcoin ATM operator, provide proof of the transaction, contact your bank, file a police report, and seek legal advice.

Bitcoin ATM Crime Has Risen Quickly

United States law enforcement has noted a significant surge in Bitcoin ATM-related crime since the beginning of 2020.

This trend has been attributed partly to the rapid rise of Bitcoin ATMs.

In January 2020, there were 4,212 Bitcoin ATMs operational in the US.

However, this number has since skyrocketed to over 34,000 Bitcoin ATMs worldwide.

A graph showing the growth of crypto ATMs over time

Scammers have become increasingly sophisticated in their methods to defraud people. This is highlighted in the Better Business Bureau’s (BBB) annual report on the largest scams of 2023, which drew from 67,000 scam reports.

According to the BBB, approximately 80% of Americans targeted in crypto and investment scams in the past year suffered financial losses.

The median loss was $3,800. However, many individuals fell victim to scams involving much larger sums.

A graph showing the comparison of the total incidents of Bitcoin machine scams in 2022 vs. 2023

Types of Bitcoin machine scams

Here are some common types of Bitcoin machine scams:

i) Pig Butchering Scams

In these scams, fraudsters create fake identities. They then establish trust with victims through various communication channels.

Once trust is established, the scammer presents a fake cryptocurrency investment opportunity.

Victims are persuaded to invest cash using a Bitcoin ATM. Thereafter, the crypto is sent to the scammer’s wallet under the disguise of an “investment site.”

ii) Romance Scams

Scammers target individuals on dating websites, apps, or social media. Gradually, they build a romantic relationship with them.

Later on, the scammer requests money from the victim. Some of the reasons might be falsified medical or travel emergencies.

Victims are convinced to send money using a cryptocurrency ATM.

iii) Impersonation Scams

Scammers here impersonate officials from government agencies or utility companies. They then use threats of legal action or service disconnection to create fear in victims.

Victims are coerced into depositing cash into a cryptocurrency ATM to resolve the supposed issue.

iv) Computer “Anti-Virus Protection” Scams

Victims see pop-up alerts on their computers instructing them to call a “help desk” number for anti-virus protection.

During the call, scammers claim that hackers have accessed the victim’s bank account.

They persuade them to convert cash into cryptocurrency using a Bitcoin ATM.

How Scammers Steal Using Bitcoin ATMs (step-by-step)

Scammers employ various tactics to deceive victims into sending money through Bitcoin ATMs.

These machines function like traditional bank ATMs, allowing scammers to receive payments in cryptocurrencies such as Bitcoin, Ethereum, and Tether.

Here is a common way they deceive users step-by-step:

1. Establish trust: The scammer contacts the victim through social media, dating sites, or forums. They build trust over time, pretending to be trustworthy.
2. Fabricate urgent situation: The scammer then fabricates an urgent situation that requires the victim’s immediate assistance. This situation could involve an investment, technical issue, medical emergency, legal trouble, or financial hardship.
3. Request payment: The scammer may ask the victim to pay to resolve the urgent situation. They may ask the victim to send money via a nearby Bitcoin ATM.
4. Direct victim to Bitcoin ATM: The scammer may even help the victim find the nearest Bitcoin ATM according to your location. The scammer will then instruct the victim to deposit cash into a Bitcoin ATM and purchase digital currency, such as Bitcoin, Ethereum, or Tether.
5. Send cryptocurrency to scammer’s wallet: After depositing cash into the virtual currency kiosk, the victim purchases cryptocurrency and sends it to the scammer’s wallet. The scammer provides the victim with a QR code associated with their wallet to facilitate the transaction.
6. Withdrawing funds from the victim’s financial accounts: In some cases, the scammer may also request the victim to withdraw money from their financial accounts, such as investment or retirement accounts, to send additional funds.
7. Completion of payment: Once the victim completes the transaction and sends the virtual currency to the scammer’s wallet, the scammer disappears or may continue manipulating the victim for further payments if they are not discovered.

Signs and Red Flags You Should Look Out For

Here are some signs and red flags to watch out for when using or encountering Bitcoin ATMs:

• Unsolicited contact: Be cautious if someone you don’t know reaches out and pressures you to use a Bitcoin ATM. Legitimate businesses won’t aggressively promote the use of specific ATMs.
• Guaranteed high returns: Be skeptical of promises of unbelievable returns on Bitcoin investments. Such guarantees are often indicative of a scam.
• Urgency and pressure: Scammers may create a sense of urgency to rush you into a decision before you can think clearly. Don’t feel pressured to use a Bitcoin ATM on the spot; take your time to evaluate the situation.
• Sending Bitcoin to strangers: If someone you don’t know well asks you to buy Bitcoin and send it to them, it’s likely a scam. Exercise caution and verify the legitimacy of the request.
• Requesting personal information: Be cautious if the ATM requests more personal information than necessary to complete the transaction, such as private keys, passwords, or banking information. A Bitcoin ATM only requires essential information, like your phone number for a receipt.

A photo of someone using a Bitcoin ATM

How to avoid Bitcoin ATM scams

To avoid falling victim to Bitcoin ATM scams, it’s essential to stay vigilant and follow these proactive measures:

– Avoid pressure or fear:

Never make payments using cryptocurrency out of pressure or fear from someone you do not know.

Do not respond immediately if you receive a random or unusual call, text, or message.

Take your time to evaluate the situation and verify the request’s legitimacy.

– Be skeptical of advance payments:

Do not pay anyone who contacts you and demands advance payment in cryptocurrency, especially through a Bitcoin ATM.

Legitimate businesses and government agencies do not typically request payment in cryptocurrency without proper documentation or verification.

– Exercise caution with unsolicited communications:

Be wary of unsolicited calls, text messages, or emails, as they may be from scammers attempting to deceive you.

If you receive an unsolicited communication, thoroughly assess its legitimacy before taking action.

– Verify caller identity:

If someone claims to be from a company or government agency and requests payment, hang up and independently verify their identity.

Use the customer service number published on their official website to confirm their legitimacy before proceeding with any transactions.

– Protect personal information:

Avoid giving out personal or financial information to unknown entities.

Be cautious when providing access to your accounts and verify the recipient’s identity before disclosing sensitive information.

– Ask questions and seek advice:

If you encounter suspicious requests or communications, don’t hesitate to ask questions and seek advice from trusted individuals, such as relatives, friends, or neighbors.

They can give you insights and help you objectively with the situation.

– Contact published customer service numbers:

If someone demands payment and claims to represent your bank, utility company, or another business, independently verify their identity by contacting the respective business’s published customer service number.

Confirm the legitimacy of the request before proceeding with any transactions.

Don’t Be a Victim: CoinTime Helps You Avoid Bitcoin ATM Scams

Bitcoin ATMs offer a convenient way to buy and sell cryptocurrency, but scammers are lurking, waiting to exploit unsuspecting users.

Scammers love crypto’s anonymity. As Special Agent Trenson Akana of the U.S. Secret Service put it, “Once the money’s on the blockchain, they can transfer and launder it in many ways.”

Here’s where CoinTime steps in to safeguard you:

Adherence to regulations

Criminals target machines without proper registration and consumer protections.

Unlicensed ATMs may be more susceptible to tampering or manipulation, putting your personal information and funds at risk.

CoinTime, on the other hand, is licensed and adheres to regulations set by its jurisdictions.

Security First

CoinTime prioritizes your information’s security.

Our measures include encryption, secure data storage, and regular security audits.

This multi-layered approach minimizes the risk of data breaches, both online when interacting with their system and at the ATM itself.

Trusted Reputation

CoinTime is a well-established company with a solid track record. We prioritize user safety and compliance with regulations. Using our ATMs gives you peace of mind, knowing you’re dealing with a reputable operator with a vested interest in protecting your financial well-being.

Clear Interface

CoinTime’s ATMs have a user-friendly interface that avoids confusing steps.

Scammers often exploit complicated interfaces with unclear instructions or hidden fees.

CoinTime’s clear interface guides you through the transaction process step-by-step, minimizing the risk of errors or confusion that scammers might use to exploit you.

How to Recover Your Money from a BTM Scam

If you find yourself in the unfortunate situation of being scammed using a Bitcoin ATM, here are steps you can take to attempt to recover your money:

Step 1: Contact the Bitcoin ATM operator:

Contact the company that operates the Bitcoin ATM near you.

You can usually find their contact information on the machine or their website.

Explain the situation in detail and provide any relevant information about the transaction.

Step 2: Provide proof of transaction:

You must provide evidence to support your refund request.

This may include a receipt from the Bitcoin ATM, a transaction ID, or a screenshot of the transaction from your Bitcoin wallet.

The more documentation you can provide, the better your chances of a successful resolution.

Step 3: Contact your bank or credit card company

If you used a debit or credit card for the transaction, immediately contact your bank or credit card company.

Inform them of the scam and inquire about their dispute resolution process.

They might manage to help you in disputing the transaction, potentially recovering your funds.

Step 4: File a police report

If you believe you’ve fallen victim to a scam, it’s crucial to report it to the authorities.

Contact your local police department and file a report outlining what happened.

Be sure to provide as much information as possible to aid their investigation.

Step 5: Seek legal advice:

If you can’t resolve the issue independently, consider consulting with a lawyer specializing in cryptocurrency and financial scams.

They can offer legal guidance and advise you on your options for recourse.

Gain more common knowledge about Bitcoin ATMS fees, transactions, limits, scams, and way more through our latest guide: 12 Things to Know Before Buying Bitcoin at an ATM