Senate Proposes Crypto ATM Scam Prevention Act

The U.S. Senate is considering new legislation to combat the rising tide of cryptocurrency ATM scams. Introduced by Senator Dick Durbin, the Crypto ATM Fraud Prevention Act aims to impose transaction limits and enhance safety measures to protect users, particularly vulnerable older adults.

According to the Federal Trade Commission (FTC), reported losses from Bitcoin ATM scams have surged nearly tenfold since 2020, with victims losing over $110 million in 2023 alone. Older adults are three times more likely to fall victim to these scams, which often involve impersonating government officials and creating a sense of urgency.

Under the proposed bill, new users would be limited to spending $2,000 daily and $10,000 within a 14-day period. Companies would be required to contact users making transactions over $500 to verify the legitimacy of the transaction. Victims who report fraud within 30 days would be entitled to full refunds, with companies facing fines of $10,000 per day for non-compliance.

The legislation follows an inquiry last fall by Democratic senators into how the largest Bitcoin ATM operators were protecting elderly users. While some companies have implemented daily transaction limits, they are often far higher than the proposed $2,000 limit. Several states, including Minnesota, California, and Vermont, have already implemented daily transaction limits.

Industry response to the bill has been mixed. CoinFlip, a cryptocurrency ATM operator, supports legislation that includes strong consumer protections while preserving access to digital currencies. However, critics argue that scammers might direct victims to multiple ATM locations to evade transaction limits. Consumer advocacy groups, such as Americans for Financial Reform, see the bill as a positive step in tackling fraudulent practices.

The FTC's Emma Fletcher noted that scammers are increasingly using cryptocurrency ATMs to take money from people. As cryptocurrency adoption grows, advocates hope that the Crypto ATM Fraud Prevention Act will protect vulnerable consumers while allowing legitimate access to digital currency services.