A Bill to Protect Consumers Using Cryptocurrency ATMs

A bill to protect consumers using cryptocurrency automatic teller machines (ATMs) in the United States has been introduced in the Senate. The Crypto ATM Fraud Prevention Act was sponsored by Illinois Senator Dick Durbin and three other Democrats.

Durbin, who has a record as a staunch opponent of cryptocurrency, introduced the bill on the Senate floor on Feb. 25. “Mr. President, it is past time we placed some common-sense guardrails on the largely unregulated industry,” he said.

The Bill Gives ATM Operators Greater Liability

Durbin outlined the main provisions of the bill during its introduction. No text of the bill is available at the time of writing. In general, it provides greater customer protection against scams and expands the responsibilities of ATM operators for scam prevention.

Specifically, crypto ATM operators would be required to warn customers about scams and take other reasonable measures to prevent fraud at their machines. Additionally, they would need to use analytics to detect fraud. Durbin noted that some crypto ATM operators already employ these measures.

Durbin mentioned how the elderly and newcomers to crypto frequently fall victim to scams involving ATMs. Several provisions in the bill are aimed at protecting these vulnerable groups.

New customers would be limited to a two-week window with a maximum of $2,000 a day in deposits and a total of $10,000. For transactions exceeding $500, the crypto ATM operator would be required to confirm the transaction through a live telephone call. This measure aims to disrupt scammers, who often keep their victims on the line during fraudulent transactions.

All customers would be entitled to a full refund for a fraudulent transaction if they report it to the police within 30 days. Furthermore, all crypto ATMs would need to provide a paper receipt for transactions, containing information useful to law enforcement.

Crypto ATM Fraud is on Many Radars

Durbin and six other Democratic senators sent a letter to the ten leading crypto ATM providers in September, inquiring about their efforts to combat fraud.

There are over 31,000 crypto ATMs in the United States. Federal Trade Commission data indicate that fraud at crypto ATMs is rising rapidly. Consumers lost $100 million in crypto ATM fraud in 2023 and $65 million in the first half of 2024. The median loss in 2024 was $10,000, with individuals over 60 being three times more likely to fall victim to such scams.

At least 15 states have proposed legislation to protect consumers from crypto ATM fraud. In New Jersey, a complete ban on crypto ATMs has been proposed.

Legislation combatting fraud at crypto ATMs has been advanced in several states this year alone, including Arizona, Rhode Island, and Iowa. The attorney general of Pennsylvania issued a warning about crypto ATMs the same day Durbin introduced his bill, while the attorney general of Delaware issued a similar warning in January.