IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

FBI warns scammers are using cryptocurrency ATMs to siphon cash

Criminals will stay on phone with victims as they make payments, says advisory

Scammers are increasingly using cryptocurrency ATMs and QR codes to siphon payments from victims, according to the FBI. 

The FBI warned scammers have been instructing victims to withdraw money from their fiat accounts and then use the money to buy cryptocurrency from an ATM, in a public service announcement

When the victim uses the machine to buy virtual currency, it asks them to scan a QR code representing a destination address for the funds. The machine offers to print out a paper wallet - a QR code the victim can scan and use to store their withdrawn cryptocurrency.

However, the scammers generate a QR code representing a cryptocurrency address in their own wallet and give this to the victim to scan instead. 

"Often the scammer is in constant online communication with the victim and provides step-by-step instructions until the payment is completed," the announcement said. 

The approach works for any online scam requiring payments between victims and gives the scammer three advantages. 

First, it's relatively frictionless compared with older methods, such as sending money via Western Union or obtaining gift cards. 

Second, scammers can receive the payments anonymously anywhere in the world. 

Related Resource

The state of brand protection 2021

A new front opens up in the war for brand safety

A log-in screen with a red background - whitepaper from MimecastFree download

Finally, the payments are irreversible. "Once a victim makes the payment, the recipient instantly owns the cryptocurrency, and often immediately transfers the funds into an account overseas," said the Bureau. "This differs from traditional bank transfers or wires where a payment transaction can remain pending for one to two days before settlement." 

The FBI said criminals use this approach in scams, including online impersonation, in which they pretend to be an institution demanding payment. They also use it for romance schemes, where they build a personal relationship with the victim and ask them to send money. 

Another common attack is lottery fraud, where victims believe they won a lottery prize and send fraudulent administrative fees to the scammer in a bid to retrieve their fake prize. 

The Federal Trade Commission (FTC) warned earlier this year of an uptick in cryptocurrency fraud, with losses almost tripling in the fourth quarter last year. 

The FBI's 2020 Internet Crime Report tracked $246.2 million in fraudulent virtual currency payments last year. That was an increase of 54.5% from $159.2 million in 2019.

Featured Resources

Big data for finance

How to leverage big data analytics and AI in the finance sector

Free Download

Ten critical factors for cloud analytics success

Cloud-native, intelligent, and automated data management strategies to accelerate time to value and ROI

Free Download

Remove barriers and reconnect with your customers

The $260 billion dollar friction problem businesses don't know they have

Free Download

The future of work is already here. Now’s the time to secure it.

Robust security to protect and enable your business

Free Download

Recommended

Cyber security in the retail sector
cyber security

Cyber security in the retail sector

28 Sep 2022
Cyber security in manufacturing
Whitepaper

Cyber security in manufacturing

28 Sep 2022
CIO Priorities: 2020 vs 2023
Whitepaper

CIO Priorities: 2020 vs 2023

23 Sep 2022
The future of work is already here. Now’s the time to secure it.
Whitepaper

The future of work is already here. Now’s the time to secure it.

21 Sep 2022

Most Popular

How to secure your hybrid workforce
Advertisement Feature

How to secure your hybrid workforce

23 Sep 2022
What your hybrid workforce needs from their laptops
Advertisement Feature

What your hybrid workforce needs from their laptops

21 Sep 2022
Why collaboration is key to digital transformation
Sponsored

Why collaboration is key to digital transformation

13 Sep 2022