San Diego could become the first California city to require warning signs on or near cryptocurrency ATMs to prevent scams.
The proposal, from San Diego City Council President Joe LaCava, is intended to combat scams that allegedly focus on the machines and primarily target senior citizens.
In the schemes, the scammers persuade victims to deposit cash into cryptocurrency ATMs located in grocery stores, convenience stores and smoke shops. Once the money is transferred, authorities say it is difficult or impossible to recover.
LaCava, at a Wednesday news conference for his proposed policy change, said warning signs would interrupt the scam before it’s too late.
“Stopping scams before they take place is critical,” he said. “In many cases, funds lost to these criminal activities are difficult to recover and can prevent individuals from putting food on the table, making rent and purchasing needed medication.”
Cryptocurrency ATMs are common across San Diego and San Diego County. Tracking how many of them is difficult.
State data cited by LaCava show 111 cryptocurrency ATMs operating at 75 locations across the city. Nearly half of those machines, 55, are located at 24 Safeway and Albertsons stores, which share the same parent company.
However, the state data may not be complete. A Times of San Diego visit to a College Area location listed in the dataset found no cryptocurrency ATM. Meanwhile, a basic internet search identified several cryptocurrency ATMs at locations not included in the state data, suggesting the actual number of machines operating in the city could be higher than reported.
Under the proposed ordinance, which was unanimously approved by a council committee on Wednesday, operators would be required to post warning signs informing customers about common scams and directing them to a city website with fraud-prevention information and reporting resources.
“Our objective is to inform members of the public about the dangers of cryptocurrency ATM scams and empower businesses to recognize and support San Diegans before they become victims,” LaCava said.
Before the committee hearing, representatives from AARP California and the city’s Senior Affairs Advisory Board joined LaCava to support the measure, describing the signs as a simple way to stop scams at the point of transaction.
“Imagine for a moment that you are a senior,” said Gwenmarie Hilleary, chair of the Senior Affairs Advisory Board. “You answer the phone when it rings. There is a friendly voice. You are told your bank account is compromised, or maybe you won a prize.”
Hilleary said scammers often spend days or weeks building trust with a victim before directing them to deposit money into a cryptocurrency ATM.
“There is a moment before the crypto machine is used,” Hilleary said. “If we put a bright warning sign on the machine, cautioning folks to stop and think before they act, we can prevent some heartache.”
Israel Hernandez, associate state director for advocacy and community engagement at AARP California, said adults 60 and older accounted for roughly two-thirds of the $389 million reported lost through cryptocurrency ATM scams nationwide last year, or about $259 million.
LaCava said the proposal was modeled in part on a similar effort in Omaha, Nebraska, where local officials and AARP reported a significant reduction in scam-related losses after introducing warning signs and public education campaigns.
“The signs matter because it’s the final point of the transaction,” Hernandez said. “By the time someone gets to the crypto kiosk, they’ve already been in conversations, and they’ve already been falling prey to the scammer.”
