A Victoria man was bilked out of $11,000 after fraudsters posing as the tax man directed him to a bitcoin ATM and persuaded him to transfer money to them via cryptocurrency.
A quick-thinking bank teller prevented the man from losing even more money, Victoria police say.
The man was contacted Wednesday evening by scammers pretending to be from the Canada Revenue Agency, said Victoria police spokesman Bowen Osoko. They told the man he owed thousands of dollars and that he could face arrest if he did not settle up.
The fraudsters told the man to withdraw a large amount of cash and then go to a bitcoin ATM at Hecklers Bar and Grill on Gorge Road East.
The scammers likely sent the man a barcode via email or text, and told him to deposit the cash into the machine and send the transaction using the barcode, said Keirnan Wright, CEO of HoneyBadger Inc., the company that owns and operates the machine.
The transaction limit is $10,000 so the man made two transactions.
Within minutes, he had lost $11,000.
The man then received a call from a different fraudster claiming to be a Victoria police officer.
This person told the victim to go to a bank branch and wire additional funds.
He demanded to stay on the phone with the man as he made the transaction.
A teller at the bank recognized the ruse and intervened.
When the teller confronted the caller, the line went dead.
The man immediately reported the fraud to Victoria police and HoneyBadger, but it’s unlikely he will be able to recoup his losses.
Because cryptocurrency transfers are peer-to-peer with no bank as the middleman, they are irreversible, Wright said. The machines do not accept debit or credit cards, only cash.
HoneyBadger’s website features an orange alert that reads “SCAM ALERT: Got a call from CRA/police/other and asked to send Bitcoin? It is a scam! Do not send bitcoin to anyone over the phone!”
A similar scam alert appears on the home screen of the machines. Before a transaction is finalized, a pop-up message asks the user “Do you control this [barcode] address or are you sending to someone else?” If you select “someone else” a warning pops up about a possible scam and the transaction is cancelled.
Wright said it’s likely the man was so panicked he flew by these safety measures.
Six weeks ago, in response to an increase in fraud cases, HoneyBadger programmed its 47 cryptocurrency machines across Canada to include a four-hour delay between the time the transaction is sent and received, Wright said. This allows the company to intervene if the sender realizes they’ve been scammed.
In this case, more than four hours passed before the man contacted HoneyBadger, Wright said.
“We’re trying to find a way to stop these scammers,” he said, adding that the company hears of about three to four scams a week across the country. “It’s one of the most disheartening things you can experience when someone calls you on the phone and they’ve just had their life savings or their child’s tuition fund disappear.”
Brad MacDougall, the manager at Hecklers, said he was working Wednesday night but during the 35-cent wing night rush, he didn’t notice someone using the bitcoin ATM. MacDougall said the machine is used daily and being a bitcoin holder himself, he often strikes up conversations with other bitcoin users.
MacDougall was gutted to hear that someone had lost such a large amount of money.
Bitcoin is a digital currency with encryption that makes it difficult to track. That feature has made it a popular currency for organized crime, money launderers and fraudsters. However, it’s also been employed as a quick and easy way to transfer money overseas and as an investment tool for speculators who can withstand the rollercoaster valuation.
Bitcoin saw a meteoric rise in 2017, with its value increasing 1,600 per cent within the calendar year. As of Friday, one bitcoin is worth $8,840 Cdn. Compare that to $426.85 Cdn in December 2014, when the Times Colonist reported on the installation of Victoria’s first bitcoin ATM at Hemp & Company downtown.
Since then, more have popped up, with about five in the city, according to the website Coin ATM Radar.
Victoria police and other police departments have been warning people about the Canada Revenue Agency scam for years. In other cases, fraudsters ask for iTunes cards, gift cards and cash-backed credit cards.
Victoria police offered tips to people to avoid being scammed in the Canada Revenue Agency fraud:
• The Canada Revenue Agency rarely, if ever, telephones. The CRA typically contacts people by mail. The agency does not take payment by bitcoin.
• Often, the fraudster will use aggressive language and actions and make threats that victims will lose their homes, businesses, and reputations, and place themselves and their families at risk of imprisonment.
• They will keep the victim on the phone for hours or repeatedly call. They will refuse to let the victim off the phone.
Anyone who believes they have been contacted by a CRA scammer should hang up the phone and talk to a loved one, a friend, or call the Victoria police non-emergency line at 250-995-7654.
