Beware: Bitcoin ATM Scammers Target Elderly, Even Those Who Don’t Own Cryptocurrency

In recent months, regulators and law enforcement have increased their efforts to crack down on cryptocurrency scams in the United States, given the chronicity of cryptocurrency-related scams involving the elderly and Bitcoin ATMs.

Cryptocurrency kiosks, better known as Bitcoin ATMs, allow anyone to purchase Bitcoin and other crypto assets with cash or a debit card. Some Bitcoin ATMs feature two-way functionality, allowing users to buy and sell Bitcoin and other cryptocurrencies for cash.

As of January 2023, there were over 69,000 Bitcoin ATMs spread across the country, which is good news as these kiosks help promote financial inclusion in areas where access to banking is limited. Furthermore, these kiosks allow people who are highly dependent on cash to gain access to the digital financial industry and the services it offers.

However, scammers and malicious actors have taken advantage of the availability of these cryptocurrency kiosks and turned them into a tool to carry out their fraudulent activities, which now target the elderly, including those who do not have a account or investment in cryptocurrencies.

Larry Nielsen, an active Florida law enforcement detective with years of experience investigating financial crimes, spoke with international business times about the growing number of seniors falling victim to this scam and detailed how these malicious actors orchestrate such fraudulent tactics.

According to Nielsen, these types of crimes involving Bitcoin ATMs and the elderly are what law enforcement see most often.

“I have worked on many cases where seniors were scammed into sending Bitcoin through a Bitcoin ATM,” Nielsen, who also recovered cheated cryptocurrency for elderly victims, adding that while he doesn't "know the exact number," "those cases keep coming and you need to get the word out to protect the elderly."

Host of the Crypto Fraudcast podcast, Nielsen is a Certified Fraud Examiner (CFE) and Certified Cryptocurrency Tracking Examiner (CTCE), he also runs a business called Fintech Focus Training and Consulting that allows him to track transactions and assist connections Between Victims and "Cryptographically Capable Law Enforcement".

As for how these malicious actors execute their scamsNielsen shared an incident where scammers shocked, scared, and tricked an elderly woman out of her savings.

The victim, according to Nielsen, received a pop-up window accompanied by a "very loud noise" that startled her. The pop-up window instructed her to call the "800 number" provided to speak to a Apple representative because his mobile phone had a virus and only the given number could solve it.

The old lady was obviously not calling Apple customer service, but the scammers. Nielsen said malicious actors like to "shock and amaze" and "put victims directly into a state of fear and insecurity" so they will comply.

Being old, imagine how that is amplified. Then they give a command like "'Call 1-800-whatever to get rid of the virus on your computer,'" Nielsen said.

"The older person, obviously shocked by this, does what the popup says. They call the number. The scammer answers the phone and poses as a representative of Apple (or Microsoft or whatever company they pretend to be in the popup message)" , said.

"Once on the phone, the scammer can do a few different things. They can request access to the victim's computer to verify things for themselves. If the victim grants them this access, it's like opening your front door and telling them let the thief come and take whatever they want," Nielsen said, further explaining that this is how scammers typically get hold of their victims' funds or computers and gain access to their bank accounts.

However, the police investigator said that this particular incident was different as instead of the victim's device, the malicious actor started talking about the old lady's bank account.

"Then the scammer, in all the haste and fear and confusion, makes the victim tell him where his banks are. The scammer then starts talking about the victim's bank account at that specific bank to make it seem more The victim didn't "I don't even realize the scammer never knew where he was until the victim told him. This is all part of the scammer's playbook. They have scripts and those scripts work," Nielsen said.

According to Nielsen, in normal times, the victim would have easily discovered the fraud with the sudden change of subject, but as the fear and pressure created by the scammer took over, he did not notice any of the telltale clues.

Nielsen said the victim was caught in an OODA Loop, an acronym for Observe, Orient, Act, and Decide, which is a concept designed to be the foundation of rational thinking in chaotic or confusing situations.

"It seems that the victims in these cases, especially the elderly, get caught between Observing and Deciding," he said, adding: "They can't seem to find their way around. The easiest and safest, or it feels that way in the end." time, is to let the scammer guide them to a satisfactory end to the situation.

Given the victim's emotional or psychological condition at the time, the scammer would tell the victim that they had some "embarrassing charges" on their bank account, which were the reasons why their account would be frozen and the funds would be seized by the authorities. at the end of the day.

"The victim is obviously in mental and emotional distress at this time and just wants a way out," Nielsen said.

The scammer then offered a solution to the victim, advising him to withdraw $35,000 and deposit it at a Bitcoin ATM near his area to "safeguard the funds and to be able to clear the embarrassing charges from the victim's account."

According to Nielsen, "the victim had never dealt with cryptocurrency before. They didn't realize what the scammer was saying didn't make any sense and they were still stuck in that OODA loop letting the scammer lead the way."

Since the victim had never owned any cryptocurrency and had no idea how it works, the scammer stayed on the phone and walked her through the process of depositing her funds into the machine, purchasing Bitcoin, and sending the funds to the scammer's wallet.

Nielsen said that scammers were aware that Bitcoin ATMs come with a warning informing people that they may be a victim of scams, but these malicious actors already knew this and advised the victim to simply ignore the warning.

To make sure the victim didn't get suspicious, the scammers turned up the heat and used fear and intimidation to keep the victim under their spell. "The scammer kept reminding the victim in a stern voice using harsh words about the consequences of not complying," Nielsen said.

"I only realized after it was over that something wasn't right," explained Nielsen, who has more than 16 years of law enforcement experience.

"After it's over is when the victim can get their bearings because the scammer is no longer present on the phone keeping them mentally occupied. I liken this to being held hostage. Older victims are literally held hostage on the phone, mentally and emotionally," added.

"The biggest thing here, and I say this a lot, is that even though a victim doesn't own cryptocurrency and may not even understand it, they can still become a victim of cryptocurrency crime. That's what happened here," Nielsen said.

"In the case of Bitcoin ATM scams, once the victim realizes they were scammed, they usually report it to the police. Of course, there are many people who probably don't report due to embarrassment, fear to the trial or think about the application of the law. I can not do anything, “he added.

Fortunately, this victim reported the incident "not long after it occurred" and Nielsen, based on his experience and connections made through his business, "was able to use a combination of advanced payment blockchain analytics software and methods of open source tracing to trace the transactions and locate some of the Bitcoin in a cooperative centralized cryptocurrency exchange in time and use the legal process to partially recover the funds from the victim."

According to Nielsen, this type of Bitcoin ATM scam targeting the elderly occurs in a short, rapid period, unlike investment scams, romance scams, and pig-slaughtering scams that span longer periods of time.

"I believe that education is the key to prevention in these cases. I believe that as many seniors as possible should be aware of this type of scam, as well as their adult children. I mention your adult children because often, the older adult children will be living in a different state," Nielsen said, adding, "This seems to be especially true in South Florida. If your adult children are also aware, they can have conversations with their parents about this issue and check them from time to time.

The Federal Bureau of Investigation (fbi) highlighted that crypto scams involving seniors reached $123 million in 2021 and continue to grow.

scammers Target the elderly because most have substantial financial resources, are generally very trusting, and are unlikely to report falling victim to these scams for fear that family members will restrict their financial independence.

Some elderly victims may suffer from cognitive impairment, which is a major factor that makes them vulnerable to this type of fraudulent activity. Also, most seniors don't understand online banking and cryptocurrency, which scammers take advantage of.