U.S. Senator Jack Reed (D-RI) announced on Feb. 26 that he has introduced the Crypto ATM Fraud Prevention Act (S. 710) to address the growing issue of cryptocurrency kiosk fraud, which has disproportionately affected older Americans.

Reed, along with Senators Dick Durbin (D-IL), Richard Blumenthal (D-CT), and Peter Welch (D-VT), outlined the key provisions of the bill, stating: “The bill would improve fraud warnings on all crypto kiosks; make cryptocurrency ATM operators develop a comprehensive anti-fraud policy, which must be submitted to the Financial Crimes Enforcement Network (FinCEN); and protect new customers … by limiting initial transaction amounts, requiring verbal confirmation of major transactions, and making victims of fraud eligible for refunds if they file a report within 30 days.”

The lawmaker emphasized the need for stronger oversight of crypto kiosks, which he called “payment portals for scammers.” He further stressed:

Crypto kiosk operators need to ensure their machines aren’t being used to victimize vulnerable citizens and launder money for illegal activities. This bill takes commonsense steps to ensure the businesses that profit from these machines are doing their part to prevent fraud.

“It’s a positive first step towards stopping the surge in crypto kiosk scams and cracking down on criminals. We must also continue working to educate vulnerable populations, especially older Americans, to recognize and avoid crypto scams,” he opined.

The legislation comes in response to a surge in fraud tied to crypto ATMs, which have reportedly become a preferred method for scammers to exploit victims, particularly the elderly. According to the Federal Trade Commission (FTC), reported losses from crypto ATM scams skyrocketed from $12 million in 2020 to $114 million in 2023, with an additional $65 million lost in the first half of 2024. The FBI’s Internet Crime Complaint Center received nearly 2,700 fraud complaints from individuals aged 60 and older last year, making up the majority of cases.

The bill seeks to replace the current patchwork of state regulations with a federal standard while allowing states to impose stricter rules. It includes several protective measures for consumers, such as mandating fraud warnings on kiosks, requiring operators to appoint a chief compliance officer, and implementing anti-fraud policies submitted to FinCEN.

Special protections for first-time users would be protected by the following provisions:

Transaction limits of $2,000 per day, and $10,000 total over the first 14 days. Full refunds for fraudulent transactions if the customer makes a report within 30 days.

Moreover, the law mandates “live, verbal confirmation for any transaction greater than $500.” The legislation also requires crypto ATM operators to register with the U.S. Treasury Department, disclose ATM locations, and provide transaction receipts with essential details, including a transaction hash and law enforcement contact information. Supported by organizations such as Americans for Financial Reform, the National Consumers League, and Public Citizen, the bill aims to curb the rapid rise in crypto-related scams and enhance accountability for operators in the digital asset space.

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