Avoid Travel Scams2026–2027 Guide
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Destination · Northern Europe

Travel Scams in Reykjavik

Reykjavik sits in the world's lowest-crime country and has very few documented street scams — you will not find shell games or fake police here. The traps are commercial rather than criminal: deregulated taxis quoting inflated fares (there is no Uber or Lyft), steep airport exchange and ATM fees, hire-car damage bills for wind-blown sand and ash, and souvenir shops selling machine-made 'Icelandic' sweaters at hand-knit prices. Pickpocketing reports around Rainbow Street and Hallgrímskirkja are a recent novelty and still rare.

1. Inflated taxi fares

Iceland has no Uber or Lyft, and rule changes that made it easier to start a taxi company have let some shady operators charge outrageous fares to tourists who do not know the going rate. Local operators report horror stories of starting fares of around 9,000 ISK on the meter — versus a normal in-town start of roughly 810–1,050 ISK — and the Keflavík airport transfer is the classic overcharge target. The fix is knowing the ballpark (a standard airport transfer was about 22,500 ISK for a 4-seater as of mid-2025) and checking the starting meter before rolling.

Warning signs

  • A starting meter reading far above roughly 1,000 ISK
  • Drivers who will not quote the airport transfer price in advance
  • Unbranded cabs touting outside bars and the airport
  • No receipt or fare information in the car

How to avoid it

  • Ask the total price before getting in, especially for airport transfers
  • Check the starting meter as the ride begins
  • Stick with established companies such as Hreyfill or BSR
  • Book airport coaches (FlyBus-style transfers) instead of ad-hoc cabs from Keflavík
Sources

2. Airport currency exchange and ATM fees

The exchange booths and ATMs at Keflavík Airport tack on steep fees for kronur you almost certainly will not use — cards and Apple Pay are accepted virtually everywhere in Iceland, from downtown cafés to remote gas stations. Icelandic travel platforms list the airport currency exchange among the country's classic tourist traps for exactly this reason.

Warning signs

  • Exchange counters prominently placed on the arrivals path
  • ATMs offering 'convenience' conversions into your home currency
  • Fee schedules in small print at airport kiosks
  • Anyone suggesting you will need cash for everyday purchases

How to avoid it

  • Skip the airport exchange booth entirely — pay by card everywhere
  • If you want cash, withdraw a small amount from a bank ATM in the city
  • Always choose to be charged in ISK, never your home currency
  • Remember tipping is not expected, so cash has few uses
Sources

3. Hire-car sand and ash damage bills

Strong Icelandic winds blast sand and ash against rental cars, stripping paint — and basic rental insurance typically excludes this damage. The UK government notes that British tourists have had to pay large sums to repair hire-car sand and ash damage, and Icelandic travel platforms warn that bargain rental deals become expensive once exclusions and add-on cover are revealed at the counter or the return inspection.

Warning signs

  • Rock-bottom rental quotes with minimal included cover
  • Sand and ash damage explicitly excluded from the base policy
  • Pressure at the counter to buy extra waivers
  • Detailed return inspections focused on paintwork and underbody

How to avoid it

  • Read the insurance exclusions before booking, not at the counter
  • Buy sand-and-ash (SAAP) and gravel protection if driving the coast or highlands
  • Photograph the car thoroughly at pickup and return
  • Park facing away from the wind on exposed stretches
Sources

4. Fake 'Icelandic' souvenirs and puffin shops

Downtown souvenir stores sell machine-made sweaters and mass-produced puffin and Viking trinkets at authentic-craft prices. Many 'lopapeysa' sweaters in tourist shops are made overseas from cheap materials despite the premium tags; genuine ones are hand-knitted in Iceland from Icelandic wool and seamless, while fakes have stitched sides and machine patterns. Icelandic travel guides list these shops among the country's top tourist traps.

Warning signs

  • No 'Made in Iceland' label on a 'traditional' sweater
  • Stitched side seams on a supposedly hand-knit lopapeysa
  • Identical stock across multiple downtown 'local' shops
  • Heavy sales pressure around cruise-ship arrival times

How to avoid it

  • Check for the 'Made in Iceland' label before paying
  • Buy from the Handknitting Association of Iceland on Rainbow Street or Rammagerðin
  • Browse Kolaportið flea market on weekends for authentic finds
  • Compare prices across shops before buying
Sources

Practical safety briefing

  • Airport arrival: Keflavík Airport is about 50 km from Reykjavik; shared airport coaches (FlyBus and similar) to the BSÍ terminal or city hotels are the standard leg, while taxis are expensive — a 4-seater transfer ran about 22,500 ISK as of mid-2025, so agree the fare before departure if you do take one.
  • Trusted transport: No Uber or Lyft operates in Iceland. Downtown Reykjavik is walkable; Strætó city buses (via the Strætó app) cover the capital area, and established taxi firms such as Hreyfill and BSR are the reliable cab option.
  • Money & payments: Skip cash almost entirely: cards and Apple Pay work everywhere, including rural fuel stops. Avoid airport exchange booths and their fees, and always choose to pay in ISK when a terminal offers your home currency — the conversion rate is consistently worse.

Official travel advisories

  • UK FCDO — Crime levels are low but petty theft and antisocial behaviour can occur, particularly around bars in downtown Reykjavík; also warns that tourists have paid large sums for hire-car sand and ash damage.

Compiled from documented reports and government advisories. How we verify scams. Last verified July 2026.