As cryptocurrency ATMs are becoming more popular, so are crypto scams. FBI data shows that Rhode Islanders lost over ten million in 2023 to fraud linked to crypto kiosks. A new bill in the General Assembly aims to establish rules for those kiosks to better protect consumers.
Morning host Luis Hernandez spoke about the issue with Catherine Taylor, State Director of AARP Rhode Island, which helped to draft the bill, as well as Dr. Timmons Roberts, Professor of Environmental Sciences and Sociology at Brown University, who was recently the victim of a scam involving a cryptocurrency kiosk.
TRANSCRIPT:
Luis Hernandez:
Help us understand, you know, the crypto kiosk and how exactly this works, and how this scam works.
Catherine Taylor:
The kiosks are basically the method of payment for a scam. So there can be any one of scores and scores and scores of scams, like a romance scam or an investment scam. Something comes at you that you don’t expect and tells you that you’ve got a big problem that you need to deal with urgently. “Oh, we’ve got your grandson who’s been in a drunk driving accident. We need to bail him out immediately.” So you’re now very upset about something bad that is happening to you that you’ve got to deal with right away. The scam artist will tell you “Now you’ve got to go to your bank, take X amount of money out, and then you’ve got to go to this smoke shop or this Cumberland Farms or convenience store, and put the money into this crypto ATM machine.” At this point, you’re so upset that you don’t really know what they’re talking about. You just know you have to do it. So you’re putting your cash into the machine, you’re buying the crypto that then is going to the scammer that you think is somebody legitimate, like law enforcement.
Hernandez:
So it’s not necessarily, you know, a crypto kiosk. My understanding was, like, you could buy crypto. This is just, it’s a special kiosk that can do that, but other things as well, and that’s where they’re guiding you to take your money, basically.
Taylor:
You’re putting your cash into the machine, you’re buying the crypto that then is going to the scammer that you think is somebody legitimate, like law enforcement.
Hernandez:
I see, just to make sure, too, by the way, these kiosks, this isn’t like an ATM, I can’t get anything out of it. I’m putting money into it.
Taylor:
That’s right.
Hernandez:
How many of these kiosks are there in Rhode Island?
Taylor:
So you can actually Google “crypto ATM near me,” and I think they’re about 120 now you’d be really surprised to how many are right, right near you.
Hernandez:
Timmons, let me ask you because you were scammed out of money last year, you got a call, right? Somebody was pretending to be a U.S. Marshal?
Timmons Roberts:
I got a call from a Washington, D.C. number, and I don’t usually answer the phone. My wife tells me not to. I will never answer the phone again. I get this call, and I pick it up, and the guy says that I failed to appear at federal jury duty in Providence at the courthouse. He gave me the address of the courthouse. I said I never got a summons for this jury duty. He said I was in contempt of court.
My options were to appear at the federal courthouse and I would be detained until the processing was over, which could take eight to ten hours, or I could pay a fee ahead of time and could maybe get out much more quickly. So I was told that I could pay this fee at a federal payment kiosk, which the government had been using since COVID, when federal buildings were closed. I was told that Coinstar machines could do that, and that I could pay cash into the machine and transfer the payment. After my signature forgery was cleared, I would be reimbursed fully.
So I’m driving through Sturbridge, Mass., and I stop at the Stop and Shop, where there was a Citizens Bank branch right in the Stop and Shop. So right by the checkout, I go to the branch and I take out money. Then I walk the 30 feet over to the Coinstar kiosk and I start feeding money into the thing because I think I’m paying my bail so I don’t have to spend a day in the courthouse locked up. Finally, I went back to the teller, who said, “Wait a minute, what are you doing? Who’s on that phone?” He asked me to hand him my phone, and he took it and said, “This is a scam.” And he hung up.
I was just shocked. It’s like, “Oh my God.” I had already paid the money. I was out the money. I called the FBI, I called the federal courthouse and found out it was a scam that’s being used all over the country. It’s humiliating. I feel like I’m one of the lucky ones. This was not life-changing for me, but I’m still upset about it; really upset about this person being in my head. He sounded so much like a federal marshal. My beloved wife says, “How did you let this happen? You should be much more skeptical of the world.” I don’t really want to live in that world. But also, I think it can really happen to anyone.
Catherine Taylor:
I would love to weigh in there too, because. We’ve got to change the narrative about being a victim of these kinds of scams, because these criminals, and they are criminals, and they are very sophisticated. They have a playbook, and they know exactly what they’re doing. They know exactly how to manipulate our psychology. I’m grateful and proud of Professor Roberts for coming forward and telling his story, because people shouldn’t be ashamed. People need to fight back against these criminals.
Hernandez:
And you are helping push this bill forward. Just really briefly, what does the bill do?
Taylor:
We’re really working hard to require, first of all, the licensing of these cryptocurrency ATM operators in the state by the Department of Business regulation. They’re currently not licensed the way regular ATMs are. So that’s an important start. We’d like to implement a daily transaction limit to limit the appeal of these machines to criminals. So if you’re putting your money into one of these machines and you do lose it, then the loss is limited. We want to require extensive disclosures prior to the transaction, clearly displaying the fees and the exchange rate. Most of these ATMs charge between 15 and 25% of the transaction on top of what you put in. So you put in $10,000 you might be out an additional $2,500. We want the machines to provide receipts so that law enforcement has something to go on because the state police can actually track down some of these transactions if they have a receipt. Finally, we want the cryptocurrency operators to refund the fees and transactions if you lose them.
Hernandez:
Timmons, you spoke before a House committee. I believe it was you spoke to lawmakers. I’d imagine you’re probably also just going around telling everybody, “Hey, you know, this is how to spot it,” or “this is how to be careful.”
Roberts:
Yeah. I mean, I was in a grocery store last week, and there was a Coinstar right across from the checkout. And I said to the checkout clerk, you know, that’s a crypto kiosk. And she was shocked. I mean, people have no idea. They have no idea. And I’m sure they’ve, you know, sit there and see people walk in with a bag full of money and start feeding it in.
Hernandez:
It’s not just the sophistication of the crimes. I also wonder, Catherine jump in please, with AI now –
Taylor:
Oh my gosh, yes.
Hernandez:
How is it? Because I’m just wondering, can laws keep up?
Taylor:
In AI, that’s a huge element in these scams. I mean, the phone call you get might actually be your grandson’s voice. AI has been used in Warwick in one of these crypto scams to emulate the exact Warwick Police Department call routing system. It’s really, really terrifying. In Rhode Island, the State Police have said that all of the crypto scams that have been reported to them involve people over 50, and one of the elements in the shame there is older adults are afraid that if their kids find out this happened to them, then they’re going to start things like nursing home placements and guardianship and all of these things. Older adults are terrified about that and so they don’t speak up.
You can report scams, companies and unwanted calls to the Federal Trade Commission at reportfraud.ftc.gov.
This story was reported by The Public’s Radio.
