Cracking Down on Crypto Fraud

When a distraught older woman walked into the Shelby County Sheriff’s Office station, Russell Bedsole initially thought she was sick. He soon realized she had just lost tens of thousands of dollars in a scam tied to a cryptocurrency kiosk.

A major in the sheriff’s office and an Alabama state lawmaker, Bedsole knew crypto kiosk scams had become increasingly common, but seeing the woman’s devastation firsthand made the issue more urgent.

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“When you witness someone who just realized they gave away perhaps their capacity to even make their house payment, you really saw where it hit home,” says Bedsole, a Republican from Alabaster.

A new law to increase consumer protections around the machines — championed by Bedsole, AARP Alabama and the Alabama Securities Commission — is set to take effect Oct. 1.

Crypto kiosks—sometimes called crypto ATMs — allow users to convert cash into Bitcoin and other digital currencies, and criminals direct victims to deposit money into the machines. They’ve become a popular tool for scammers since transactions often involve overseas exchanges, making it difficult for law enforcement to trace and recoup money.

A review by the Alabama Securities Commission that examined a sample of cryptocurrency kiosk transactions totaling $12.8 million found that at least $7.3 million was tied to fraud losses. Older adults were disproportionately affected, with victims age 60 and older accounting for nearly $6 million of the confirmed losses.

“Fraudsters found this to be the perfect vehicle to facilitate criminal activity,” says Amanda Senn, director of the commission.

The new law requires operators to post fraud warnings on kiosks, imposes transaction limits for new users and creates a refund process for victims who report fraud to law enforcement.

Alabama joins a growing number of states pursuing tighter oversight of crypto kiosks. As of press time, 30 states nationwide have enacted legislation to do so. In the Southeast, Tennessee has banned the kiosks (one of three states in the nation to do so); Mississippi, Louisiana and Georgia have enacted oversight laws; Florida has passed such legislation and awaits the governor’s signature; and South Carolina has introduced legislation.

More information at aarp.org/cryptoATMs.

More AARP Fraud Resources

• AARP Fraud Watch Network How to access the free service.
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