Fraudsters Taking Advantage of Crypto ATMs, FBI Warns

Fraudsters are increasingly using cryptocurrency ATMs and QR codes to swindle funds from unsuspecting consumers, the FBI has warned.

In a new alert, the law enforcement agency warned that — although the specific context of the scam may differ — the methods used are usually the same.

Criminals usually generate a QR code that directs funds to their own address, and then encourage the victim to visit a physical crypto ATM.

From here, the victim is told to insert cash, buy digital assets, and scan the QR code.

Although this process may seem convoluted at first, the FBI says scammers are often "in constant online communication with the victim and provide step-by-step instructions until the payment is completed."

The FBI went on to warn:

"Cryptocurrency's decentralized nature creates challenges that make it difficult to recover. Once a victim makes the payment, the recipient instantly owns the cryptocurrency, and often immediately transfers the funds into an account overseas. This differs from traditional bank transfers or wires where a payment transaction can remain pending for one to two days before settlement. It can also make law enforcement's recovery of the funds difficult and can leave many victims with a financial loss."

Tackling Scams

Setting out the types of scams that are particularly prevalent right now, the FBI singled out online impersonation schemes where fraudsters mimic governments, law enforcement agencies or businesses. Others see cybercriminals establish "an online relationship with a victim by creating a false sense of intimacy and dependency." And then there are lottery scams, where victims are duped into thinking they have won a big cash prize.

Of course, these types of scams have been around for decades. The challenge now is digital assets may have given them a new lease of life, and a new way for criminals to receive funds.