(The Center Square) – A credit union member said she needed to withdraw $37,000 in cash to buy a BMW and it wasn’t until later – after the withdrawn cash had been inserted into a virtual currency kiosk – that the member acknowledged she had been swindled by a crypto-savvy scammer.
The story was told to state lawmakers Wednesday by Members First Federal Credit Union Chief Risk Officer Frank Serina during a hearing focused on the ATM-like electronic “crypto” kiosks that have popped up around the state. Time and again, bank or credit union account holders who often are senior citizens are being duped into making big withdrawals and then sticking the cash into the kiosks – only to lose it for good.
The hearing was led by Republican state Sen. Tracy Pennycuick of Montgomery County, who is revising a bill that would create safeguards involving virtual currency.
Blunt testimony came from state Paul Edger, a senior deputy state attorney general in that office’s Bureau of Consumer Protection.
Ninety Pennsylvania consumer complaints were logged since 2024 in alleged scams where the victim made payments via cryptocurrency through a kiosk, Edger said. Losses in those alleged scams added up to more than $12 million, he said.
Still more complaints involved a different type of scam, also at kiosks.
“Our office has concerns with the continued use of virtual currency kiosks, and their increased use in criminal activity,” Edger testified. “While their purported use is to permit the quick and easy conversion from fiat currency to cryptocurrency, these kiosks are overwhelmingly utilized to promote scams.”
The ATM-like devices have appeared in convenience stores and gas stations, among other places. Testimony indicated they often are placed in dark or out-of-the-way areas within the businesses.
Testimony showed that individuals who wish to purchase cryptocurrency use them – but so do scammers who coerce victims by various means to take money out of their traditional bank or credit union accounts. That money is then deposited into a “digital wallet” that belongs to the scammer, not the person making the deposit.
“True consumer protection means preventing harm,” Teresa Osborne of AARP told lawmakers. Currently, most money put into a virtual currency kiosk under false pretenses is non-recoverable, and Osborne urged lawmakers to consider putting payment of refunds into the legislation.
Christopher Edwards of Bitcoin Depot, which operates the largest number of kiosks in the nation, said they give customers the ability to convert cash directly into crypto – and that usefulness will only grow in value as the “crypto economy” grows. His company, he said, runs a “very robust compliance program” and supports “rules of the road” for the industry in Pennsylvania that do not stifle commerce.
Pennycuick has introduced a bill aimed at transparency, accountability, and consumer protection. Among other things, it calls for a kiosk operator to provide consumers with a warning with language similar to: “Consumer fraud often starts with contact from a stranger who is initiating a dishonest scheme.”
At least one other legislative proposal is in the works. State Rep. Liz Hanbidge, a Montgomery County Democrat, said she plans to introduce a bill that would have kiosks provide “disclosures of the risk and volatility of virtual currency,” among other things.
