ATMs selling bitcoin scam consumers out of millions, FBI says

Convenience store ATMs that sell bitcoin are scamming US consumers out of millions, according to the FBI. And now some Massachusetts lawmakers and the American Association of Retired Persons are calling for a statewide ban of the machines.

“The losses are staggering," said Jen Benson, a former state representative who now serves as director of AARP Massachusetts. “We’ve talked to victims who’ve lost a hundred, a hundred fifty-thousand dollars."

The operators of bitcoin ATMs are not themselves being accused of wrongdoing, but critics say the relatively anonymous nature of the transactions they support are making traditional confidence schemes and scams harder to investigate and stop.

One victim, Nancy Lannom of Waltham, got an email purportedly from the online financial company PayPal, warning that her bank account had been compromised. The letter told her to protect herself by uploading her savings to a bitcoin account provided by the scammers. Lannom handed over $15,000.

But then “my wonderful 26-year-old daughter talked to me and said Mom, it’s a scam," Lannom said.

She’d sent the money directly to the scammers’ bitcoin account, so recovering the cash should have been nearly hopeless. But Waltham police managed to recover about $12,000.

Lannom said she’s extremely lucky, and agrees with AARP that bitcoin ATMs should be banned.

“There’s just more and more victims on a daily basis," she said. “It just makes no sense that they’re allowed."

Benson said that her organization has worked with state lawmakers to draw up bills to regulate bitcoin ATMs. There are pending bills that would set up a statewide registry of the machines, set limits on transaction fees, and restrict individual deposits to a maximum of $1,000.

But Benson now backs a total ban on the machines, because crypto ATM fraud is soaring. The FBI’s 2025 Internet Crime Report identified $389 million in cryptocurrency fraud losses in 2025, up 58 percent from the year before.

In addition, Massachusetts Attorney General Andrea Joy Campbell alleges that between August 2023 and January 2025 over 80 percent of bitcoin ATM transactions of $10,000 or higher were related to financial scams. In February, Campbell filed a lawsuit against Bitcoin Depot, a leading bitcoin ATM operator, claiming that the company is aware that most of its large transactions involve illegal activity.

When bitcoin ATMs first appeared, there was no easy way for consumers to trade in cryptocurrencies. These days, smartphone apps like Venmo, PayPal, or CashApp make it easy, while charging lower transaction fees than the typical bitcoin ATM.

As a result, said Benson, “very few people use these for legitimate purposes, because the fees are so high."

Bitcoin ATMs, however, are one of the only options for people who primarily use cash to buy cryptocurrency — including people without bank accounts.

One other state has eliminated bitcoin ATMs; last year Indiana became the first to enact such a ban.

Lonnie Talbert, chief executive of the ATM Industry Association, which represents operators of bitcoin ATMs, said that state governments should concentrate on tracking down criminals, rather than punishing companies that provide a valuable service that can sometimes be abused.

“What about check fraud? Are we getting rid of checks?" Talbert said. “What about point-of-sale fraud? What about credit card fraud? We don’t get rid of those things. But this is a new technology people don’t understand."

Kathleen Murphy, president of the Massachusetts Bankers Association, came out in support of a ban, along with a multitude of public officials, including Democratic state Representative Kate Lipper-Garabedian of Melrose, Democratic state Senator John J. Cronin of Fitchburg, Essex County District Attorney Paul F. Tucker, and Waltham Mayor Jeannette McCarthy, whose town has already banned the machines.

Mary Mbugua of Haverhill wants a similar law statewide, so others won’t be victimized as she was.

Mbugua, a breast cancer survivor, had just returned home from a chemotherapy session in late 2024 when she received an email about an unpaid bill she didn’t recognize, along with a phone number. When Mbugua, who emigrated from Kenya in 2004, dialed the number, she was threatened with arrest for smuggling drugs into Kenya and told the police were on their way to arrest her. Her only hope was to withdraw her savings from the bank and deposit them in a bitcoin ATM.

“I was shaking and shaking," said Mbugua. She told the man she was under doctor’s orders not to drive her car. “He said, yeah, but you have to. I started crying. He said whether you cry or not you have to do what we tell you."

Despite her illness, Mbugua made it to the bank, withdrew $5,500 and fed it into a bitcoin ATM. The scammer, still on the phone with her, demanded the account number printed on the receipt. But Mbugua refused to read it to him. Instead, she told her son about the incident, and he contacted Haverhill police, who were able to recover her money.

“I would never want anybody to have that experience," said Mbugua. “I’m telling you today I could be dead. My kids could have lost their mother."

Hiawatha Bray can be reached at hiawatha.bray@globe.com. Follow him @GlobeTechLab.