On September 8, the D.C. Attorney General filed a lawsuit in D.C. Superior Court against a crypto ATM operator alleging violations of the Consumer Protection Procedures Act and the Abuse, Neglect, and Financial Exploitation of Vulnerable Adults and the Elderly Act. The suit also alleges unlicensed money transmission activity in the District.
The complaint focuses on kiosk activity in Washington, D.C., asserting that undisclosed markups, rigid refund practices, and ineffective safeguards have enabled scams that disproportionately impact older residents. The Attorney General is seeking injunctive relief, restitution, damages, civil penalties, and changes to the company’s disclosure and refund practices.
Specifically, the complaint alleges that the company:
- Charged undisclosed fees up to 26 percent. The displayed markup was folded into a quoted exchange rate rather than itemized, which limited consumers’ ability to see the true cost before inserting cash.
- Facilitated widespread scam activity affecting elderly consumers. Early operating data showed most deposits were tied to fraud, with a median victim age of 71 and a median loss of $8,000 per transaction.
- Relied on ineffective warnings and wallet-ownership attestations. On-screen prompts and checkboxes did not stop deposits to wallets previously used by other victims, even when indicators of fraud were present.
- Denied or arbitrarily capped refunds for fraud victims. Consumers were told transactions were final and, when refunds were offered, they were limited, leaving substantial consumers losses unrecovered.
- Operated without the required District money-transmission license. The company converted cash to crypto and transmitted value to third-party wallets without the necessary authorization.
Putting It Into Practice: Federal and state regulators are turning increased attention to consumer protections at crypto kiosks and ATMs, which places fee transparency, fraud controls, refund practices, and licensing squarely in the spotlight (previously discussed here and here). Companies with kiosk exposure should expect additional state and federal actions on similar practices and should adjust compliance procedures accordingly.