Proposed Article Would Ban Crypto Kiosks

ORLEANS – Should a proposed bylaw pass with voters at this fall’s special town meeting, it would mark the end for cryptocurrency kiosks in town.

 The Orleans Police Department is working with the town to craft an article for the fall session to create a bylaw that would prohibit the machines, which police said have been used to scam people out of money.

 As cryptocurrency such as Bitcoin continues to grow in popularity, kiosks can be found in some stores where people can transfer and convert money into digital currency. But use of the machines isn’t without risk, cautioned Orleans Police Chief Scott MacDonald. Speaking to the select board July 1, MacDonald cited FBI data estimating that 85 percent of all activity on cryptocurrency machines is fraudulent.

 “So if you’re looking for a reason why, that’s the reason why,” he said of the purpose behind the new bylaw.

 Orleans Police Lt. Andrew McLaughlin said that police have responded to between five and 10 cases of people being scammed locally through the use of cryptocurrency kiosks in the last year and a half. He said the kiosks are less secure than mobile cryptocurrency apps.

 “Financially, unless you don’t have an app or access to an app or you want to hide money, or you’re being told to do something…I don’t know why you would use one of these cryptocurrency kiosks to transfer money,” he said when reached by phone last week.

 The cryptocurrency scam is the latest iteration of scams that police have been warning the public against for several years, McLaughlin said. A person receives a call or email from someone posing as a bank or financial institution alerting them that someone is trying to steal money from their account. They’re told to call a number to address the problem, at which point they’re told to deposit an equivalent amount of money into a crypto account to “freeze” the money that the alleged perpetrator is trying to steal.

 McLaughlin said when the transaction is completed, the money is dispersed among a number of different virtual wallets, making the money difficult to trace and recover. In most cases, he said victims are scammed out of thousands of dollars.

 “It’s always the same thing,” he said of the similarities between the crypto scam and other phone and online scams. “There’s always urgency. It’s always an emergency. ‘You need to do this now or this is going to happen. You’ll be responsible. You’re now involved in a crime.’”

 McLaughlin estimated that the bylaw would apply to three or four kiosks in Orleans, including one at the Cumberland Farms on Main Street. A manager at the store declined to answer questions about the store’s kiosk for this story. A representative from Cumberland Farms’ corporate offices similarly declined to comment.

 But Kevin Galligan of the select board suggested July 1 that stores with the kiosks might welcome a bylaw banning their operation.

 “The shop, which is now corporate run, is happy to take their money, but the local operators don’t want them in there,” he said.

 So what should you do if you happen to receive a phone call or email instructing you to transfer money via crypto? First and foremost, McLaughlin said, don’t engage with anyone directly. Recipients should first check with the alleged bank or sender to verify whether the call or email is legitimate. 

 McLaughlin also advised people not to fall victim to claims that they might be subject to arrest or investigation if they don’t comply with the sender’s orders. Police do not give people a heads up if they are the target for arrest, he said, and federal authorities will not get involved in helping stop any purported scams. You should also be careful not to share any personal information, such as a copy of your ID, license or passwords to your bank account or computer.

 And while some people might feel ashamed or embarrassed to realize they might have fallen for a scam, McLaughlin urged victims to call the police as soon as possible if they think they’ve been victimized.

 “If you do a wire transfer, the likelihood of us getting [your money] back is pretty good if you tell us within 24 hours,” he said. “Eight hours, awesome. If you wait two months to tell us, I’d say it’s definitely gone.”

 McLaughlin said the proposed bylaw is not a referendum on cryptocurrency itself, but specifically the use of kiosks.

 “It’s the platform that’s used to wire, transfer and send this money,” he said.