On February 3, the Massachusetts attorney general announced that her office  had filed a lawsuit alleging a bitcoin ATM operator used misleading and deceptive sales practices to overcharge consumers, knowingly facilitated crypto scams that robbed Massachusetts consumers of millions of dollars, refused to issue refunds to scam victims, and deceived investors about the level of scam activity on the operator’s kiosks.

The complaint asserted that the operator, which owns more than 8,000 virtual currency kiosks offering bitcoin across the country, advertised bitcoin prices that it would not honor and added hidden fees to purchases that exceeded the limits it had disclosed. Notably, the company allegedly engaged in “drip pricing tactics,” where the price initially displayed was significantly lower than the final charges to the consumer, resulting in consumers paying thousands of dollars more than they expected. The attorney general further alleged that the bitcoin ATM operator: (i) knowingly facilitated crypto scams by allowing large transactions that scammers used to defraud victims; (ii) ignored prior warnings from its employees that almost all its large transactions were related to scams; (iii) reduced the information it collects from customers in an effort to reduce its ability to identify these scams; (iv) failed to provide meaningful refunds to victims; and (v) withheld material information from investors about the extent of scam-related activity, despite acknowledging the risk in public filings.

The attorney general levied five counts against the company for engaging in misleading pricing, charging excessive fees, facilitating fraud, having a deceptive refund policy, and withholding information from investors. The lawsuit seeks injunctive relief, restitution, and civil penalties for violations of state consumer protection laws.