Operating over 50 ATMs across the US means that Athena is the gateway for tens of thousands of customers to the world of Bitcoin and other digital currencies. While we help customers every day get the coins they want and need, a few customers end up wishing they had never purchased bitcoin in the first place: Victims of fraud perpetuated by third-parties. We've issued scam warnings in the past (1,2,3), and even broke news about one "hurricane" scam last year, but we wanted to provide a more comprehensive list of situations you should look out for.
It's important to note that these are updates of scams that have existed for much longer than Bitcoin has been around. Most have been adapted to take advantage of this new payment form; these scams would have been and still are conducted using Western Union/MoneyGram, money orders, or even bank wires. Scammers using Bitcoin will often "helpfully" point out nearby ATMs from which you can send them money. They like Bitcoin because transactions cannot be cancelled, reversed, or otherwise refunded once broadcast.
— Bitcoin Scams to Avoid —
Click on the scam type below to read full descriptions from Fraud.org and other great resources.
Fake Merchandise Scams (more info)
These are listings for "great deals" on typically high-value items on Craigslist, eBay, OfferUp, Amazon, and other places where individuals can post ads. They are most likely selling....
- Airbnb rentals: Scammers either point to legitimate listings on Airbnb, create copycat websites that look like Airbnb, or possibly list their own fake listings on Airbnb just to lure people into a conversation outside of the Airbnb.com website. Once the victim communicates with them the scammer will give the victim instructions via email or some other channel to pay for their "reservation" or "down payment" with bitcoin. We've also seen EasyRoommate.com affected by this.
- Concert tickets: Scammers will list on Craigslist or other individual ad sites fake or non-existent concert tickets sold for bitcoin. As is usual in these cases, the scammer will just disappear, and you will be out hundreds of dollars. We've seen theme park tickets also as the subject of this scam.
- Used cars / eBay Motors scam: This is one of the most common Bitcoin ATM scams. The scammer will post a used car for a very low price on Craigslist, reusing photos and data from some older or legitimate listing elsewhere. The scammer will often tell a personal story involving the death of a family member or military deployment forcing them to sell the car. They will also promise to ship the car to the buyer, offering no way to meet in person. What's worse is that they will go to great lengths make their emails look real (see below), but the car doesn't exist, eBay has no knowledge of it, and the victim will simply lose their money.
eBay Motors, Amazon, Airbnb, Ticketmaster, and many other major retailers DO NOT yet accept bitcoin!
...and if they did, they would do so only through their own secure websites.
Government Notice Scam
- IRS scam: Most government scams take the form of demands from the IRS to pay debts owed. The scammer can contact you through any communications method, including phone calls. This type of scam can be potentially very costly for the victim, including a high risk for stealing sensitive personal information. The scammer will sometimes provide details to pay via bitcoin. Of course, Uncle Sam does not yet accept bitcoin. Never pay supposed IRS debts via an ATM!
Fake Income Scams
- Check cashing scam: This category also includes fake jobs or interviews. Someone remote will offer to pay you via check (sometimes other forms) and expect you to send bitcoin to another destination for some believable reason. Excuses include sending money to clients, purchasing a wardrobe, or paying for transportation. Not only is this potentially money laundering, but most likely you will see the original check bounce and only you will be responsible for the lost cash or bitcoin. In short, if someone is sending you money just so you can send money somewhere else, be very suspicious.
Scams of the Heart
- Grandparent scam: Victim is contacted by a supposed relative, often a grandchild, cousin, niece, or nephew who needs bail money or is otherwise in urgent trouble. After briefly describing the problem the scammer cuts off communication except for payment instructions, intending to panic the victim. This scam particularly impacts the elderly. We would suggest taking your time and verifying the story with other relatives before sending any money.
- Romance scam: Victim believes they are in a relationship with someone they either rarely meet or never meet and is often in another country. Scammer asks them to help pay for urgent expenses, including costs of traveling to see the victim, customs fees, medical bills, and so forth. Bitcoin is especially applicable here since it is often used for cross-border payments. Unfortunately, romance scams can go unnoticed for quite some time.
This category involves some of the most common types of scams and those that are the hardest to recognize (before it's too late), but there are still signs....
- Ponzi / Pyramid schemes: Victims will see ads for investment programs promising unusually high rates of return. Claims are often made to behind-the-scenes forex or crypto trading. Many also advertise their own new token as being a "better Bitcoin" where you can get in on the ground floor--the implication being that it will, too, experience Bitcoin-like rates of explosive growth. Unfortunately, virtually all of these are scams. The investment principal from later investors are used to pay out the earlier investors until the whole scheme collapses. One of the biggest warning signs are promises to pay a specific percentage of earnings daily or weekly. Pyramid schemes are often tacked on in the form of referral bonuses. They rely upon ever expanding downstream networks of distributors to promote the scheme and are also doomed to collapse.
Bitconnect is a famous and very recent example of a Ponzi and Pyramid scheme combined whose token lost 99% of its value in mid-January following state regulatory pressure (1,2,3). Other notable scams include Onecoin, Gladiacoin, and USI-Tech.
Ponzis will always exist in one form or another and wreck many naive investors' lives.
Don't let it happen to you.
- Initial Coin Offerings (ICOs): ICOs are the initial sale of a new token to the public, analogous to an Initial Public Offering for stock. Normally taking the form of ERC-20 tokens created on the Ethereum network, ICOs became a popular and novel way to raise funds in 2017. While some forms of ICOs may be legitimate, the legal consequences surrounding these investments is still poorly understood, with many of them likely to be considered securities by the SEC. Regardless of their regulatory status, scammers make use of ICOs in attempted "pump and dump" schemes by the hundreds. It was widely reported that nearly half of 2017's ICOs have already failed. Please do considerable research before participating in any ICO, and don't feel pressured by limited-time token sales.
Unsure about a payment? STOP! ...and give us a call (312-690-4466) or message. We can't determine if your destination is legitimate, but we can help you assess the risk that it may not be.