It seems, unfortunately, that we never talk enough and, perhaps, do enough about the problem of banking fraud; how it affects elderly Americans, in particular. This month is Elder Fraud Awareness Month, so it’s a good time to have the discussion. But it’s also a good time for another reason; the Federal Reserve Bank of Kansas City granting access to Federal Reserve payment services to a crypto-affiliated, uninsured entity lacking consolidated federal supervision. That entity? Kraken Financial.
The local banking community is obviously concerned, and those concerns were articulated in a June 18 letter from the Independent Community Bankers of America (ICBA) to Jeffrey R. Schmid, President and CEO of the Federal Reserve Bank of Kansas City. The letter, available for review on the ICBA website, makes a detailed case for why the ICBA “continues to have significant unresolved concerns… as “such access raises substantial operational, legal, reputational, illicit-finance, and precedent-setting concerns for the banking system and the broader payments ecosystem.”
While certainly worth reading in its entirety, I think that perhaps this paragraph sums up the concern:
“Kraken’s role in enabling the growth of crypto-kiosk fraud is too significant to ignore. Continuing to supply billions of dollars in bitcoin to kiosk operators—even as the Federal Bureau of Investigation issued repeated warnings and state attorneys general brought enforcement actions against those operators—raises serious questions about Kraken’s capacity to manage risk and its compliance with core anti-money-laundering obligations, including the duty to detect and report suspicious activity.”
The letter then goes on to point out that three of the cryptocurrency kiosk operators, to which Kraken is providing hundreds of millions in bitcoin, are under investigation and “face serious allegations from multiple state attorneys general.” And here’s where the discussion turns back to senior fraud:
“On September 8, 2025, District of Columbia Attorney General Brian Scwalb filed a lawsuit against Athena Bitcoin, Inc. for violating the District’s Consumer Protection Procedures Act and Abuse, Neglect, and Financial Exploitation of Vulnerable Adults and the Elderly Act. Attorney General Schwalb’s investigation found that 93% of all Athena BTM deposits were the direct result of scams, and most users were elderly Americans.”
Cryptocurrency makes the problem worse
Yes, elderly Americans have always been the targets of choice for financial fraudsters. They have, most likely, accumulated significant savings. They tend to be more trusting of authority figures. They may be less familiar with emerging technologies and fraud schemes. And, they often answer phone calls and respond to texts more readily than younger generations.
But, the introduction of cryptocurrency kiosks is transforming this fraud business into a multi-million dollar industry. According to the ICBA’s letter: “Cryptocurrency-related fraud accounted for nearly 60% of all fraud losses reported to the FBI last year, making it the leading source of fraud losses to Americans. Although crypto fraud takes many forms, the spread of crypto kiosks has given criminals an efficient tool to reach victims, exploit the relative anonymity of kiosk transactions, and move stolen funds beyond recovery.” And last year, more than 6,000 victims age 60 or older reported $257 million in losses tied to cryptokiosk fraud, which is fully two-thirds of all reported kiosk-related losses and 45% of all complaints. The ICBA says, “this predatory conduct is stripping seniors of their life savings and demands an urgent response.”
Numerous state attorneys general and law enforcement agencies across the country, including the FBI, with the issuing of a Senior Fraud Awareness Day warning, have repeatedly reminded financial institutions to beware of customers withdrawing large sums of cash to purchase cryptocurrency. And yet, the threat continues to grow exponentially.
Tactics that are more sophisticated than ever
What does a crypto-kiosk fraud attack look like? Victims are commonly told that their Social Security number has been compromised, that they owe taxes, that a relative has been arrested or injured, or that their bank account has been hacked. Extreme pressure is put upon the target, with the fraudster painting the victim's situation as “do or die.” The fraudster counts on the pressure, and the resulting state of panic, to motivate the victim to act quickly… and irrationally.
With today's scams being highly sophisticated, using tactics such as AI voice cloning, spoofed phone numbers, fake bank websites, and QR code scams, even the most tech-savvy consumer can be fooled. What can a community bank do? Take a layered education and communication approach:
Conduct regular fraud education workshops: Host in-person seminars that cover the tactics fraudsters use. Keep the sessions practical and interactive. Show actual examples of scam texts, emails, and websites. Better yet, invite individuals with expertise in cybercrime. While these can be held at the bank or even a local restaurant, a great place to host these workshops would be where your senior customers are most comfortable; at senior living facilities.
Create a trusted contact program: Encourage older customers to designate a trusted family member or friend. When unusual account activity occurs, the bank can contact that individual if permitted by policy and regulations. This can be one of the most powerful fraud-prevention tools available.
Train front-line employees: Customer service representatives are a critical line of defense. Staff must be trained to recognize red flags, such as:
- Customers making unusually large withdrawals
- Customers appearing nervous or under pressure
- Requests to wire money urgently
- Customers mentioning cryptocurrency kiosks
- Customers saying they were instructed not to tell anyone
Employees should feel empowered to respectfully pause transactions and ask questions. In fact, many fraud losses are prevented because an observant teller notices something doesn't seem right.
Get the word out: In crypto-kiosk crimes, the fraudster instructs the victim to deposit money into a cryptocurrency kiosk and often the victim has never purchased cryptocurrency before the scam. Community banks should:
- Publish warnings in branches, newsletters, social media
- Include warnings on ATM screens
- Discuss these scams during workshops
- Send periodic SMS alerts
- Create flyers and brochures focused on cryptocurrency fraud
Need a resource?
Community banks partnering with Bank Marketing Center (BMC) have access to a wealth of professionally designed marketing communication assets that can be used to help educate and protect seniors from fraud. Banks can choose from a wide variety of ready-to-use materials and customize them to reflect their brand, messaging, and local market; from print and digital ads to direct mail, brochures, statement stuffers, social media, and branch signage. These highly customizable resources make it easy to deliver timely, relevant messaging through multiple channels and touchpoints.
What’s next?
The reality is that fraud prevention is as much about behavioral awareness as it is about technology. Community banks cannot stop every crypto-kiosk fraud scam, but they can dramatically reduce losses by becoming the senior customer's most trusted source of fraud education. By doing so, they also become that customer’s most trusted partner in their financial journey.
Bank Marketing Center
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We also want to share what we know—and learn along the way—with all our community banking friends. Whether it’s content focused on the latest on AI technology, suggestions on how to attract and retain top talent, or the importance of data protection, we’re here to make bank marketing the best that it can be.
Want to learn more about what we can do for your community bank and your marketing efforts? You can start by visiting bankmarketingcenter.com. Then, feel free to contact me directly by phone at 678-528-6688 or via email at nreynolds@bankmarketingcenter.com. As always, I welcome your thoughts.