In January, Jim Meduri from San Jose received a frightening phone call from a man pretending to be his son. The caller, on the verge of tears, said he’d been in a car accident. Meduri was convinced his son had been arrested for DUI and injuring a pregnant woman and her daughter.

The scammers went as far as to impersonate a defense attorney and a courthouse clerk. They told Meduri his son might be sent from the Bay Area to Nevada due to a monkeypox outbreak at the jail. Panicked, he agreed to send bail money through cryptocurrency. He put $15,000 in cash into a Bitcoin ATM and transferred the money. Unfortunately, by the time he realized he’d been tricked, his money was gone.

Fraud involving Bitcoin ATMs is on the rise, and law enforcement officials are taking notice. Located in convenience stores, gas stations, and bakeries, Bitcoin ATMs provide an easy way to buy cryptocurrency quickly with cash. As scammers exploit the convenience these machines provide, lawmakers, regulators, and consumer advocacy groups are looking to protect people from fraud and exorbitant fees.

In January, California will limit cryptocurrency ATM transactions to $1,000 per day per person under Senate Bill 401. Additionally, Bitcoin ATM operators will not be allowed to collect fees higher than $5 or 15% of the transaction, whichever is greater, starting in 2025.

Since 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams, according to the Federal Trade Commission. While cryptocurrency victims may be able to get their money back, it is rare.

Erin West, a Santa Clara County Deputy District Attorney, said her team has been able to recover $2.5 million for scam victims by tracking down the cryptocurrency exchange involved in the transaction.

Under federal law, Bitcoin ATM operators are typically considered money services businesses and must register with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). They must maintain an