Phoenix, Ariz. - Crypto ATMs are playing a bigger role in cryptocurrency scams than ever before, according to the Arizona Corporation Commission’s Securities Division.

Nationwide data from the Federal Trade Commission (FTC) shows consumers reporting over $110 million in losses to scams involving cryptocurrency ATM machines in 2023, a tenfold increase since 2020.

What are Crypto ATMs and how do they work?

A crypto ATM is an electronic kiosk designed to facilitate buying cryptocurrencies using any financial transaction card, including a cash or a debit card. These machines look like traditional ATMs and are located in all the usual places: gas stations, convenience stores, malls, and other high-traffic areas.

You can deposit money into the ATM where it charges a fee, transfers the money into cryptocurrency and puts it into an electronic wallet. The consumer provides the address of the digital wallet.

How are Crypto ATMS used as a portal for scammers?

The scams typically start through online chats, social media, emails, texts, pop-up messages and phone calls from strangers. The lies told by scammers vary, but they create some urgent justification for consumers to take cash out of their bank accounts and put it into a crypto ATM.

Often, the scammers fabricate an investment that promises great returns with limited risk.  When consumers put their money into the crypto ATM, the ATM converts the money to cryptocurrency. The consumer types in the scammer’s electronic wallet address, or the consumer is given a QR code to scan which points to the scammer’s electronic wallet address. The ATM then transfers the crypto to the scammer’s electronic wallet. Once in their control the scammers quickly move the crypto making it very difficult to trace and recover.

How to protect yourself from crypto ATM scams. 

The Corporation Commission recommends investors take these proactive measures:

• Never click on links or respond directly to unexpected calls, messages, or computer pop-ups. If you think it could be legitimate, contact the company or agency, but look up their number or website yourself. Don't use the phone number the caller or message gave you.
• Slow down. Scammers want to rush you, so stop and check it out. Before you do anything else, talk with someone you trust.
• Never withdraw cash in response to an unexpected call or message. Only scammers will tell you to do that.
• Don’t believe anyone who says you need to use a crypto ATM to protect your money or to fix a problem or to get in a great investment. Real businesses and government agencies will never do that—and anyone who asks is a scammer.

More Consumer Guidelines.

Be cautious if someone tells you something is a secret or information cannot be shared with anyone. This is a method used by scammers that is a red flag because it isolates individuals from trusted resources. Remember, most crypto ATMs do not:

• Limit daily transaction amounts, which means there is no limit to how much you can lose in a day.
• Collect know-your-customer information for account holders, which means that no one is verifying who you are sending crypto to but you.
• Pause or have a “cooling off” period on transactions (~72 hours), which means your digital assets are transferred away immediately.
• Have any registrations of the ATMs with the government, meaning governmental agencies have a difficult time providing help to consumers.
• Have any fraud prevention or reimbursement policy, which increases risk of financial loss.
• Provide details about the transaction and where assets are being sent on the receipts.
• Limit transaction fees, which can be very high.

For additional tips and resources, visit the Commission’s investor education website at azcc.gov/azinvestor.