PHOENIX (AZFamily) — New ATMs are popping up across the state, but these machines don’t give out any money.
Instead, you deposit money and get cryptocurrency in return. But thanks to scammers, some are finding once they make that deposit, the money is gone forever.
“It really sounded legitimate,” Tamara Glerum said.
Glerum thought she was doing everything right. She had a problem with her PayPal account and said she Googled the number for customer service. Things quickly went down from there.
“I want you to know that someone is trying to get into all of your accounts, and we have a fraud department that’s going to walk you through how we can fix that,” she explained.
Glerum said the man emailed her a copy of his work ID.
But his next request should have raised a red flag.
“In order for me to catch this person, I have to duplicate all the transactions that he did, and I said, ‘Well why do you need my money?’ He says, ‘Well, we want to pretend like he’s getting the money so that we can catch him,’” Glerum said.
Glerum was instructed to purchase several gift cards, in varying amounts. Then she was told to take more money out, putting it into a Bitcoin ATM.
“I was getting really nervous about all of this going on, but he seemed like he was legitimate. He said, ‘Don’t worry, I’m not going to take your money. Your money is safe,’” she continued.
Peoria Police confirm she lost nearly $28,000.
It’s one of the 24 recent incidents involving unregulated Bitcoin ATMs.
In total, just in Peoria last year, police say families lost nearly a million dollars.
In 2023, the FBI found people in Arizona reported losing about $325 million, and that’s just what was reported.
Experts say there are about 600 Bitcoin ATMs statewide. And as that number grows, so do the risks.
Our Arizona’s Family Investigates reporter Amy Cutler asked Yavapai County Sheriff’s Office investigator Ron Norfleet what he tells people who reach out about this.
“What can you say? You know, you just pretty much say I think, I’m sorry. There’s not much we can do,” he responded.
Norfleet is the sole investigator in the Yavapai County Sheriff’s Office Fraud Unit.
He said after receiving two reports of scams involving these Bitcoin ATMs in less than a week, he reached out to the Arizona Attorney General’s Office for help.
Together they started a new initiative, putting signs up at Bitcoin ATMs to warn customers of the dangers.
“They are Hollywood actors, and they can figure out your mood in about two nanoseconds once they get you on the phone,” Norfleet said.
“It was really eye-opening at the beginning just how much nefarious activity, how much fraud happened,” Anthony Zervos, a former fraud analyst, said.
Zervos worked for Digital Mint, a company that used to own and operate Bitcoin ATMs.
Zervos said their ATMs would flag new customers who were making large transactions, running them through a series of questions to determine if they were being scammed.
“Maybe two in 10 were legitimate, maybe two in 10 were actually like, I know what I’m doing,” Zervos explained.
But most Bitcoin ATM operators don’t have precautions like that in place and in Arizona, they’re not required to.
Instead, customers often go through a series of prompts on the machine which advocates say are easy to swipe through.
“If this is going to be part of our lives moving forward, let’s put some rules around it and try to protect people,” Brendon Blake with AARP Arizona said.
That’s why Blake said they’ve appealed to lawmakers at the state and federal level.
“It’s clear we need a national standard and that’s why I’m introducing federal legislation,” Democratic Sen. Dick Durbin from Illinois said.
During his time as chair of the U.S. Senate Committee on the Judiciary, he wrote to the 10 largest Bitcoin ATM operators, requesting that more safeguards be put in place.
“The industry ought to step up and help us write those standards,” Durbin said.
Cutler asked when Glerum knew she was being scammed.
“When he said I’m putting the money back in and it never went back in,” Glerum responded.
She’s speaking out in the hopes that she can prevent someone else from being scammed. The consequences are real and devastating.
“It was all that I had because I’m on Social Security. That was my savings and my IRA,” she said.
AARP Arizona said any request to pay or make a deposit through a crypto ATM is a big red flag.
Legitimate businesses and most government agencies don’t accept payment through Bitcoin ATMs.
Keep in mind, whether it’s crypto or an online service like Zelle, if you send money to someone you don’t know, it’s virtually impossible to get back.
In response to our questions, several Bitcoin ATM operators said they look forward to working with lawmakers on this and that some of what’s being proposed are already steps they’ve taken.
In Arizona, there’s a bill to regulate these machines. It’s called HB 2387.
It would impose a licensing requirement for Bitcoin ATMs beginning next year.
Operators would have to maintain detailed records of transactions for the last five years. It would also set a transaction limit of a thousand dollars a day. It’s still in committee.
AARP Arizona said they’re cautiously optimistic it will pass.
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