The Washington State Department of Financial Institutions has issued this Consumer Alert to notify Washington consumers that there appears to be an increase in the use of virtual currency kiosks to perpetuate fraudulent or illicit activity. Often referred to as “Bitcoin ATMs,” virtual currency kiosks, found in locations like grocery stores, gas stations, convenience stores, and malls, look and operate like a regular bank ATM. However, these virtual currency kiosks allow individuals to purchase and send virtual currencies, like Bitcoin, Ethereum, and Tether, to other parties.
Traditionally, scammers would trick unsuspecting victims into sending money via money transfers or gift cards. Now, scammers have started directing victims to send virtual currency via virtual currency kiosks. While there are many scam tactics, scammers may work to gain a victim’s trust over time, creating a false sense of security before fabricating an urgent situation in which they need the victim’s help. The scammer directs their victim to deposit the cash into a virtual currency kiosk and purchase virtual currency, which is then sent to the scammer’s virtual currency wallet. Below are some common scam tactics:
- Romance Scams
Romance scams” occur when a scammer creates a fake online profile on social media or dating applications and feigns romantic interest in the victim. Accordingly, the scammer gains the victim’s trust over time, and requests money for false purposes including emergency medical or legal fees. Once the victim sends payment via a virtual currency kiosk, the scammer disappears.
- Pig Butchering
Pig butchering scams often begin with the victim receiving an unsolicited text message from an unknown number. Over time, the scammer works to build a relationship and gain the trust of their victim. Eventually, the scammer will pitch a fail-safe virtual currency investment to their victim. The scammer will direct victims to “invest” cash, via a virtual currency kiosk, in a phony investment website or mobile app that is controlled by the scammer or their associates.
- Investment Adviser Scams
Investment adviser scams occur when a scammer convinces their victim to make initial investments on a fake trading platform. As with many other scams, the scammers work to gain their victim’s trust over time. The scammer will direct victims to “invest” cash using a virtual currency kiosk and will create falsified information to show the victim their investment gains. Ultimately, the victim will continue to “invest” larger and larger amounts only to learn they have been scammed when they are locked out of their accounts.
- Computer "Anti-Virus Protection" Scams
Computer “anti-virus protection” scams occur when a fake "pop-up" alert appears on a victim’s computer screen directing the victim to call a “help-desk” number to receive anti-virus protection. The scammer, posing as a customer service agent, will persuade the victim that hackers have accessed their bank account. The scammer will convince the victim that they need to convert their cash to virtual currency via a virtual currency kiosk. Once the victim transfers their virtual currency, the scammers will disappear.
- Impersonation Scams
Impersonation scams occur when scammers pose as someone in a position of authority. The scammer may claim to be local law enforcement, the FBI, the IRS, the USPS, or other government official. For example, some scammers will pose as their victim’s local public utility company and threaten to disconnect service to the victim’s home unless a payment is made via a virtual currency kiosk. Scammers may also impersonate an established business, a prize promotor, or financial institution. Ultimately, the scammer uses their power over the victim to convince them to convert cash to virtual currency, often via virtual currency kiosks.
DFI warns Washington consumers not to send money or virtual currency to someone they do not know or trust. Once money or virtual currency has been sent and it is received by the scammer, the money or virtual currency is gone. Consumers should take the following precautions to avoid falling victim to scams:
- NEVER send money or virtual currency to someone you have not met in person.
- NEVER send money or virtual currency, even to someone you may think you know, if the circumstances are unusual, if the person requests money or virtual currency in advance, or if the person claims an emergency or creates any other urgent need for funds.
- NEVER send money or virtual currency to someone that has provided you with a payment by check and is asking you to then send money or virtual currency back to them.
- NEVER provide any personal information, such as your social security number, bank account number, wallet address, or access to any of your financial accounts unless the company is licensed or authorized to conduct business.
- ALWAYS ensure that the company or person you are sending money or virtual currency to is legitimate. No legitimate business will request that you send money or virtual currency in advance. Do not be afraid to ask questions and reject pressure to make decisions or provide information on the spot. Confirm the identity of the person you are speaking to by contacting the published customer service number of the company they claim to be affiliated with.
- ALWAYS stay informed about current scams involving money or virtual currency transfers and know what signs to watch for. You can subscribe for e-mail updates from DFI.
DFI encourages Washington consumers to verify that the money transmitter used to send money or virtual currency is licensed. Consumers can use the “Verify a License” feature on DFI's website.
Additionally, DFI encourages Washington consumers to report unlicensed activity or fraud. If you suspect a virtual currency kiosk is operating without a license, or you have additional questions, please call DFI at 1-877-RING-DFI (746-4334), or online at www.dfi.wa.gov.
Important Information for All Consumers
- If you feel you have been the victim of a scam, contact the money transmitter immediately.
- If you feel you have been the victim of a scam you may contact the FTC at 1-877-FTC-HELP (382-4357) or online at www.ftc.gov; or the Consumer Financial Protection Bureau (CFPB) at 1-855-411-CFPB (2372) or online at www.consumerfinance.gov.
- If the scammers already have your bank account information, social security number, or other personal information, you may be a victim of identity theft. Contact your bank and the three major credit bureaus to take appropriate precautions. The FTC has information for victims of identity theft online at www.ftc.gov.
- If you feel you have been the victim of a scam involving the internet you can contact the Internet Crime Complaint Center online at www.ic3.gov.
- Keep informed about common scams. Visit www.consumer.ftc.gov and click on "Scam Alerts" for information about recent scams.
- If you live in another state, find the regulator in your home state.