Thousands have lost huge sums after being lured into fraudulent online investment schemes by seemingly attractive strangers who strike up online conversations with them. Here’s a guide to spotting the telltale signs.
If you’re like most people, you’ve received a text or chat message in recent months from a stranger with an attractive profile photograph. It might open with a simple “Hi” or what seems like good-natured confusion about why your phone number seems to be in the person’s address book. But these messages are often far from accidental: They’re the first step in a process intended to steer you from a friendly chat to an online investment to, ultimately, watching your money disappear into the account of a fraudster.
Congress and Industry Leaders Call for Crackdown on Hospice Fraud
“Pig butchering,” as the technique is known — the phrase alludes to the practice of fattening a hog before slaughter — originated in China, then went global during the pandemic. Today criminal syndicates target people around the world, often by forcing human trafficking victims in Southeast Asia to perpetrate the schemes against their will. ProPublica recently published an in-depth investigation of pig butchering, based on months of interviews with dozens of scam victims, former scam sweatshop workers, advocates, rescue workers, law enforcement and investigators, along with extensive documentary evidence including training manuals for scammers, chat transcripts between scammers and their targets and complaints filed with the Federal Trade Commission.
“We’ve had people from all walks of life that have been victimized in these cases and the paydays have been huge,” said Andrew Frey, a financial investigator for the Secret Service, the federal agency that is taking a lead role in combating online crime and trying to help victims recover their stolen funds.
These swindles are not only highly organized but also systematized. Here’s how the fraudsters typically go about it, including photographs, excerpts from text exchanges between scammers and targets, advice from training guides for fraudsters and police reports from pig butchering cases:
1. Create a fake identity
Pig butchers most often begin by creating a phony online persona, typically accompanied by an alluring photo (which itself might have been stolen) and images that convey a glamorous lifestyle.
This Instagram profile was reported to the Federal Trade Commission by a Florida resident who complained of losing $89,000 to a pig butchering scam. (Meta, which owns Instagram, said it’s investigating the account, whose owner didn’t respond to a request for comment.)
2. Initiate contact
Once they’ve got an online profile, fraudsters begin sending messages to people on dating or social networking sites. Alternatively, they may use WhatsApp or another messaging service and pretend to have stumbled on a “wrong number” as they contact you. (A spokesperson for Meta, which owns WhatsApp, previously told ProPublica that the company is investing “significant resources” into keeping pig-butchering scammers off its platforms.)
In December 2020, a Connecticut man received these messages on WhatsApp from a seemingly friendly stranger. He responded and eventually ended up getting tricked into two scams that cost him a total of $180,000.
3. Win the trust of the target
The next step is starting a conversation with a potential victim to gain their trust. The scammers often initiate benign chats about life, family and work with an eye toward mining their targets for information about their lives that they can later use to manipulate them. They’ll fabricate details about their own life that make them seem similar to you. After all, people like people who are like them.
When a Houston woman revealed that her brother was born with cerebral palsy, a crook countered with a similar-sounding tale:
4. Sign them up
Before long, the swindlers will pivot to a discussion of investing. They’ll make claims about their own purported investing successes, perhaps sharing screenshots of a brokerage account with gaudy numbers in it. They’ll try to convince targets to open an account at their online brokerage. Unbeknownst to the target, the brokerage is a sham, and any money deposited will go straight to the scammer. Most victims don’t figure out that last part until it’s too late.
5. Get them to put real money into the fake account
Once marks agree to learn investing tricks, the scammers will “help” them with the investment process. The fraudsters will explain how to wire money from their bank account to a crypto wallet and eventually to the fake brokerage. Typically the fraudster will ease the process by recommending a modest initial investment — which will inevitably show a gain.
A woman in Michigan became intrigued by her online boyfriend’s references to making money trading gold and offered to become his student. Two days later, he was teaching her how to get started investing in a fake brokerage accessible through MetaTrader:
6. “Prove” that it’s legitimate
Scammers often allay initial doubts by letting targets withdraw money once or twice to convince them the process is trustworthy. For example, fraudsters allowed a Canadian man named Sajid Ikram to withdraw 33,000 Canadian dollars, according to a statement he filed with the Royal Canadian Mounted Police. That returned money helped convince him that his investment was real. He reported ultimately losing nearly $400,000, including money borrowed from several friends.
7. Manipulate them into investing more
That’s only the beginning. Pig butchering guides offer insights on how to exploit marks’ emotional and financial vulnerabilities to manipulate them into depositing more and more funds. It starts with assurances that the investments are risk-free, then escalates into pressure to take out loans, liquidate retirement savings, even mortgage a house.
Over a period of nine days, one scammer (who called herself Jessica) escalated her pressure, pushing the target, a California man, first to use his cash on hand, then to tap his retirement savings, then to borrow money.
8. Cut them off
Once targets reach a limit and become unwilling to deposit more funds, their seeming investment success comes to a sudden stop. Withdrawals become impossible, or they suffer a big “loss” that wipes out their entire investment.
The California man was aghast when he discovered $440,000 he’d deposited was gone. Ultimately, the swindler persuaded him to invest another $600,000, which also disappeared into the swindler’s account.
Scammers will then turn the screws of manipulation tighter by telling victims there’s a potential solution: If they deposit more cash into the brokerage, they can regain what they lost. Sometimes, the claim is that the investment is successful — but there’s a “tax problem” that requires paying additional funds equal to, say, 20% of their total account value. If the victim pays, the scammer will claim that new obstacles have arisen that require paying new fees.
No matter how much targets pay, it’s never enough, as detailed in the FTC complaint excerpted below, which was filed by a pig butchering victim in Maryland. This person lost almost $1.4 million, in part because the person kept meeting scammers’ demands to pay taxes and various fees to get their money back:
“Once the trading has ended, I applied to withdrawal my money and profit from the website. The broker asked me to pay a tax on the profit of 88,587.90 usd on 8162021, this amount was wired again through Bank of America into a foreign account in Hong Kong. Another request for me to pay security deposit on my profits which was 83,950.00 usd wired out to a different foreign account in Hong Kong once again. The broker asked for a bank and withdrawal processing fee of 27,983.34 usd again was wired out to a different foreign account in Hong Kong. The very last wire was for expediting the withdrawal and the platform asked for 55,966.60 usd wired out to Hong Kong. At this point I already had to much money in the platform so I kept giving in.”
10. Taunt and depart
Once the targets are aware that they’ve been swindled, the fraudsters often insult or taunt them. They soon go silent, and the websites of their phony brokerages stop working. Then they relaunch a new website under a different URL and restart the process with other targets.
After nearly four months of chatting and $30,000 in losses for the Michigan victim, her scammer seemed to revel in unveiling the financial — and emotional — deception:
Ways to avoid holiday scams
- Verify a retail website or person is legitimate
- Use the Better Business Bureau’s website (www.bbb.org) to investigate retailers
- Scrutinize things sold at significantly discounted prices
- Make sure the site you buy from has "https" in the web address, otherwise your personal information is not safe
- Beware of sites that require payment with a gift card.
- Don't give someone your credit card information through unsolicited emails, don't click on links or reply in unsolicited emails
- Routinely monitor your credit card statements
- Verify requests for personal information by contacting them using the information on their website
- Use strong passwords with banking, credit card and rewards accounts, change passwords regularly
- What to do if you're a victim of a scam
- Immediately contact your bank and stop transactions if you discover fraudulent or suspicious activity
- Ask your bank to call the financial institution involved in the suspicious transaction
- Report to the Internet Crime Complaint Center at IC3.gov
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