Senators introduce Crypto ATM Fraud Prevention Act to fight scams
When 80-year-old Joseph Buentello of Grand Prairie received a call claiming his son was in jail, he panicked.
Rushing to his local grocery store, he sent $5,000 through a Bitcoin ATM, only to realize later that he had been scammed.
Buentello's experience highlights the vulnerability of many Americans to these scams.
"I was scared... I hit the panic button and let my panic take control of my good judgment," Buentello said.
This week, a group of U.S. senators introduced the Crypto ATM Fraud Prevention Act aimed at cracking down on crypto ATM scams with federal regulations.
The new bill, introduced by Sen. Dick Durbin (D-Illinois), seeks to add layers of protection to Bitcoin ATM transactions and increase transparency from ATM operators.
"These measures are common-sense guardrails that will protect countless Americans, particularly senior citizens, from losing thousands of their hard-earned dollars to scams," Durbin said Tuesday on the Senate floor.
Bitcoin ATMs are becoming increasingly common, popping up in gas stations, convenience stores, smoke shops, and grocery stores. Five years ago, there were roughly 1,000 cryptocurrency ATMs in Texas. Today, there are more than 3,500 in the state and nearly 30,000 nationwide.
These machines offer a legitimate and easy way to buy cryptocurrency, but with convenience comes risk. Last year, the FBI warned that scammers are increasingly using these machines, leading to significant losses for victims.
According to the Federal Trade Commission, consumer losses in Bitcoin ATM scams skyrocketed tenfold to $114 million from 2020 to 2023. This figure only includes reported losses, suggesting the actual amount could be higher.
The proposed federal legislation includes several measures to protect consumers, particularly first-time users who are most likely to be scam victims:
- Transaction Limits: New users will have a transaction limit of $2,000 per day and $10,000 total over the first 14 days.
- Live Confirmation: Transactions greater than $500 will require live, verbal confirmation for new users.
- Refunds: Full refunds will be provided if a new customer reports fraud within 30 days.
- Warnings: Operators must provide clear warnings about the risk of fraud.
- Anti-Fraud Policy: Operators must develop a comprehensive anti-fraud policy and appoint a chief compliance officer.
- Registration and Disclosure: Operators must register with the Treasury Department and disclose ATM locations.
- Receipts: Operators must provide receipts with sufficient information to trace the transaction.
In an email to CBS News Texas, crypto ATM operator Unbank stated that it already meets most of the proposed requirements and supports measures to enhance fraud prevention. However, the company added, "we strongly oppose provisions that limit financial access, create unnecessary regulatory choke points, and increase compliance burdens without clear fraud-reduction benefits."
Other crypto ATM operators have expressed support for efforts to crack down on scams in letters to Congress, with some noting that their current safeguards already go above and beyond to protect consumers. CBS News Texas reached out to several operators for their thoughts on the new proposal.
