Great Lakes Wire

Today, Michigan Attorney General Dana Nessel issued a consumer alert cautioning residents about scams involving Bitcoin ATMs. According to Nessel, "Because money sent through Bitcoin ATMs is nearly impossible to recover and these machines lack oversight and regulation, they have become an attractive option for criminals engaged in fraud and money laundering. Staying informed can protect consumers from falling victim."

The warned scam chiefly targets older adults, involving deceptive messages or calls from individuals asserting they are from known companies or law enforcement. Scammers convince victims their financial accounts are compromised, urging immediate action to thwart unauthorized transactions. If imposters pose as law enforcement, they might even threaten legal consequences unless payment is made promptly.

Victims are directed to withdraw large amounts of cash and deposit it into a Bitcoin ATM. The money is converted into Bitcoin, with a receipt or QR code sent to the scammer, resulting in permanent loss of the funds. Unlike traditional financial transfers, which have fraud prevention practices, Bitcoin ATM transactions do not offer such protection.

Bitcoin ATMs are largely unregulated, making them prone to usage in scams and money laundering. Though some may use these ATMs for legitimate transactions, they often incur high fees, making them expensive for purchasing cryptocurrency. It's recommended to convert cash to cryptocurrency through licensed and regulated online exchanges for better safety and economy.

Victims of these scams lack effective consumer protections, as Bitcoin ATMs are not covered by the same safeguards as financial institutions. Nessel emphasized avoiding becoming a victim by remembering key precautions:

1. Legitimate entities will never request deposits into Bitcoin ATMs; such requests signal a scam.

2. Scams often create urgency to impair critical reasoning.

3. Caller ID can be falsified, appearing as trusted sources.

4. Never install unknown software or allow remote access to devices.

5. Consult with a bank before making unusual large withdrawals.

Scam incidents should be reported to the Michigan Attorney General’s Consumer Protection Team and local law enforcement. For more information or to file a complaint, individuals can contact the Consumer Protection Team in Lansing, Michigan.