Should cities ban cryptocurrency kiosks to combat scams? Some are considering it
Effort to ban cryptocurrency in the Twin Cities
Some cities in the metro area are making an effort to ban cryptocurrency machines due scam risks. FOX 9's Mike Manzoni has the story.
FOREST LAKE, Minn. (FOX 9) - The Forest Lake City Council met Monday night to discuss how to handle a surge in scams involving cryptocurrency kiosks.
Forest Lake grapples with cryptocurrency scammers, weighs options
The backstory:
Forest Lake police said victims have lost more than $300,000 in schemes involving cryptocurrency kiosks over the last two years. The Forest Lake City Council met Monday night to consider how to clamp down on the scams. The options include regulating or banning virtual currency machines.
What is cryptocurrency:
Cryptocurrency is a digital currency that is purchased electronically. Both Bitcoin and Ether are popular cryptocurrencies. Cryptocurrency is used for payments and as an investment.
How the scams work:
The scammers typically impersonate police officers or government officials, often convincing victims over the phone that they have committed a crime and need to pay money to avoid jail time. The scammers then stay on the phone and force the victims to lie to bank tellers, police officers and others. The scams conclude when the victims wire funds to the scammers via cryptocurrency kiosks, which are found at many convenience stores.
Scammers also commonly use investment fraud schemes, which involve convincing victims to send them funds under the guise of investments. In many cases, the victims never recover their lost money.
What are the city’s options:
The city council has three options: do not take any action, pass an ordinance requiring owners to register kiosks or ban them outright.
During Monday night’s meeting, the council expressed support for an ordinance.
The ordinance would impose a $2,000 to $3,000 fee and require signage and cameras at kiosk locations to deter fraud. In addition, a kiosk operator would not be allowed to register if there were three or more reported instances of fraud involving one of their kiosks in the preceding 12 months.
What they're saying:
"The employees will even see people come in all confused standing at the kiosk and they’ll ask them questions like, ‘Do you know what you’re doing? Do you need help?’ And they’re so wrapped up in the scam that they just brush everyone off," explained Forest Lake police Detective Nathan Olstad.
Other Minnesota cities report cryptocurrency fraud, consider bans
The City of Woodbury has reported $6.6 million in cryptocurrency losses from kiosks and online transactions since 2021. The City of White Bear Lake reported about $125,000 in losses in 2023.
The cities of Stillwater, Hastings and Cottage Grove are considering banning kiosks.
Cryptocurrency scams are on the rise, feds say
Big picture view:
In 2023, the FBI received more than 5,500 complaints involving cryptocurrency kiosks, with losses totaling more than $189 million. There were nearly 70,000 reports of fraud involving cryptocurrency, with total losses of $5.6 billion, a 45 percent increase from the previous year, according to the FBI. According to the Federal Trade Commission, the losses have increased tenfold since 2020.
In 2023, there were 976 complaints involving cryptocurrency fraud in Minnesota, with total losses of more than $75 million, according to the FBI. The state ranks in the top 20 for both virtual currency fraud reports and losses.
What's next:
The city council will discuss an ordinance requiring owners to register cryptocurrency kiosks at its March 24 meeting.