Scammers send victims to bitcoin ATMs. ‘No getting it back.’

Scammers send victims to bitcoin ATMs. ‘No getting it back.’

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A woman gestures toward a bitcoin ATM.
Woodbury Police Detective Lynn Lawrence explains how thieves scam people using bitcoin ATMs, like this one located at a gas station in Woodbury. More than 46,000 people in the U.S. reported losing more than $1.3 billion in cryptocurrency to scams from the start of 2021 through June 2022, according to a report by the Federal Trade Commission. (John Autey / Pioneer Press)

The email that arrived in a Woodbury woman’s inbox on Valentine’s Day 2022 purportedly came from Geek Squad. It said her subscription to the 24-hour in-home computer support and repair services was being renewed. Her account would be debited $1,145.

“Years ago, we had a service contract with Geek Squad, so I didn’t think much about it,” the woman said. “The email said if I didn’t want to renew, I had 48 hours to cancel it, but that 48-hour period had already passed.”

The woman called the phone number listed on the email — which had a fake invoice number and an official-looking logo — and told the man who answered that she didn’t want to renew. “He said, ‘No problem. I can take care of that for you,’” she said.

Over the course of the next several days, the man and his accomplices ended up scamming the 78-year-old woman, a married mother of two adult children, out of more than $70,000.

“By the end, they had me so wrapped up and so scared and intimidated that I probably would have sold my house,” she told the Pioneer Press in a recent interview. “It’s just crazy.”

The scammers had the woman go to her Wells Fargo bank in Woodbury and withdraw $7,750 on three different occasions and $8,000 on another. Each time, she said, she was told to take the cash to a CoinFlip bitcoin ATM inside a gas station on Woodlane Drive in Woodbury. She had to enter a QR code provided by the scammers and feed the cash — one $100 bill at a time — into the ATM.

“It’s really sad, but there’s not much we can do,” said Lynn Lawrence, a Woodbury police detective. “The money is gone within seconds, and once it’s gone, there’s no getting it back.”

Attractive to scammers

More than 46,000 people in the U.S. reported losing more than $1.3 billion in cryptocurrency to scams from the start of 2021 through June 2022, according to a report by the Federal Trade Commission.

Several factors make crypto attractive to scammers: There’s no bank or other centralized authority to flag suspicious transactions, crypto transfers can’t be reversed and most people are still unfamiliar with how crypto works, according to the FTC.

When there were far fewer bitcoin ATMs around, it was much harder to run crypto scams, Lawrence said. Now, more than 375 bitcoin ATMs are up and running in Minnesota, including four in Woodbury, according to data from Coin ATM Radar.

“It’s much different if we have a victim who has transferred money from one bank account to another bank account,” Lawrence said. “Sometimes we can intercept those funds with the receiving bank and stop that kind of stuff, but with bitcoin, we don’t have those abilities, so really prevention and education is our only option at this point.”

Lawrence and the victim, who agreed to speak with the Pioneer Press on the condition of anonymity, hope that sharing her story will serve as a warning to others. “I don’t want anyone else to go through what I went through,” the woman said.

Cases involving cryptocurrency scams are especially frustrating for officials because they are so difficult to investigate, said Marty Fleischhacker, senior financial fraud ombudsman for the Minnesota Department of Commerce. “The thing about cryptocurrency is you really can’t trace it, so you have no real ability to find the perpetrators at any point by following the money trail, so how do you stop it?” he said. “That’s the problem.”

EXPLAINER: How cryptocurrencies and blockchain work 

Adding to the problem: Crypto is highly unregulated and complex, so even when it’s not a scam, it’s very risky, Fleischhacker said. People should be aware of potential scams, and no one should give out any financial information without double-checking the source, he said.

Marty Fleischhacker (Courtesy of the Minnesota Department of Commerce)

“The old saying used to be ‘Trust, but verify’; now it’s ‘Verify before you trust,’” he said. “That’s what I always tell people. There is no leeway in that anymore, unfortunately, because there are certain organized criminals that are so good.

“They are Oscar-level actors. They know how to address all your concerns. They know how to mentally prepare you for what you’re doing. And they always have an answer as to how they’re helping you. They can add veiled threats in these situations to motivate the victim as well.”

Bottom line: Don’t believe anything anyone tells you, said Fleischhacker, who began focusing strictly on senior fraud in 2019. “You have to verify at the source that you look up yourself. If there is time pressure involved, and you haven’t met the person in-person who is on the phone and telling you about these time pressures, make sure you get somebody else involved. You can always talk to law enforcement or you can talk to a regulator confidentially, and you don’t have to worry about anyone knowing.”

‘They always start low’

Detective Nick Sullivan of the Washington County Sheriff’s Office investigated his first crypto case in the spring of 2021. Since then, he’s had dozens more, with more than $650,000 in losses reported by victims of cryptocurrency scams in 2022, he said.

Scammers used to send victims to Walmart, Target or The Home Depot and have them purchase gift cards, but now they’re being sent to bitcoin ATMs, Sullivan said. “They’re not changing the scams themselves,” he said. “They’re just changing the way they’re getting their money.”

In the fall of 2021, a man from Grant lost $382,000 in a Tesla investment scam after clicking on a pop-up message on his computer.

Det. Nick Sullivan (Courtesy of the Washington County Sheriff’s Office)

“He just fell for it,” Sullivan said. “He clicked on it and went through all the prompts. They always start low, right? It was $1,000, $2,000, $5,000, and then they just kept asking for more and more.

“A lot of times the victims get into this rut where they think, ‘Oh, I’ve just got to be able to recover this somehow.’ The scammers give them this sense of false hope. They’ll say, ‘Oh, we’re going to help you. You’re going to get your money back.’”

Scammers also persuaded a woman from Lake Elmo to go to her bank and withdraw $28,000, deposit it in a bitcoin ATM and transfer it to them. They said that if anyone at the bank asked, she was to tell them “she needed the money because she had to get her roof fixed,” Sullivan said. “She withdrew every dollar she had.”

The woman initially balked at the idea and said she thought it was a scam, but the woman on the phone convinced her otherwise, Sullivan said. “She said, ‘No, it’s not a scam. Go ahead and go on Google. Look up my name, and you’ll see a photo and that’s who I am,’” he said. “So she goes online, sees a photo and says, ‘Oh, OK, you must be legit.’ They set it up, and it’s so frustrating. It kills me. It absolutely kills me every day because there’s nothing I can do with this.”

Don’t answer

Don’t want to get scammed? Don’t answer your phone if you don’t recognize the number, Sullivan said.

“Anytime anybody calls and says anything’s wrong or they need money, hang up immediately and call somebody you know to validate that information, or call law enforcement,” he said. “These scammers, they’re going to stress the urgency of it. They’re going to say, ‘You have to do it now.’ No. There is no urgency. Just hang up and call somebody, or don’t answer the phone. I mean it seems so simple, but it’s hard. It’s hard, and then once they’re locked in, they’re in.”

RELATED: Tips to avoid being crypto-scammed

Scammers over the past year have targeted several Mahtomedi residents, including a 74-year-old woman who was scammed out of $40,000 after receiving a “Your Computer Has Been Locked” alert; a 73-year-old woman who was scammed out of $15,000 after receiving a phone call from a man claiming to be a PayPal employee; a 78-year-old woman who was scammed out of $15,000 by a man who called and said he was an Amazon employee; and a 72-year-old man who lost $18,000 after a man claiming to be an employee of his bank called to say he needed to withdraw money from his accounts at the bank and “deposit it in a bitcoin kiosk for safekeeping,” according to police reports.

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