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You’d fund a “sure thing” investment in cryptocurrency if a stranger walked up and suggested it, right? “No way, no how,” you say. But what if a new financial advisor contacted you on LinkedIn, or a Facebook friend mentioned an appealing opportunity to bulk up your bank account?
The line between the laughably ridiculous con and a savvy, unexpected fleecing can blur quickly these days. This is especially true when it comes to “pig butchering” scams, expertly concocted efforts that have filched millions from unsuspecting victims. Scammers draw in the victim—that is, “fatten the pig”—with bogus returns until it’s time to move in for the kill.
The FBI issued a warning about this investment fraud trend in October 2022. The next month, the Justice Department seized seven domains running pig butchering schemes that it said stole more than $10 million from victims.
Anatomy of a Pig Butchering Scam
In this type of swindle, the perpetrator may, for example, persuade a target to invest in a phony cryptocurrency account and then disappear with the money. I’ve learned a lot about how these scenarios play out in my role as senior fellow for threat research at Fortra. Here’s the progression.
Contact Is Made
Pig butchering scams commonly begin as romance or confidence scams on dating apps or social media channels. Fraudsters may also use LinkedIn or professional networking sites to promote themselves as highly successful financial advisors. The scammer will eventually try to move the conversation off the initial platform onto something like WhatsApp to evade fraud detection.
Another type of contact happens via regular texting: A scammer will send messages to lists of cell numbers they’ve purchased. They’ll say something like “What time are we meeting tomorrow?” in the hopes of striking up a conversation. They may also masquerade as family members or long-lost friends.
Trust and Credibility Are Built
All scams rely on some element of manipulative social engineering, but it’s the bread and butter of pig butchering. Scammers prey on vulnerability, loneliness—and greed. Regardless of how the initial contact is made, the goal is to win the target’s trust and ultimately introduce an investment opportunity as an oh-by-the-way mention.
If the scammer is purporting to be a new online friend or romantic partner, there may be several weeks or even months between the initial contact and the day the investment is brought up. The fraudster may even support the pitch with a nicely designed website or screenshots of an app showing impressive gains in an account dashboard.
The app images will typically feature lofty star ratings and positive (fake) reviews. Website URLs may be slight variations of well-known crypto exchanges to instill confidence.
The Victim Is Enticed To Invest
Once the victim feels comfortable with the investment proposal, they’re ready to pour in some money. Sometimes this means digging into life savings or taking out a loan to access funds.
The Returns Look High
Following the initial investment, the scammer’s website or app screenshots will display significant returns in hopes the target will invest more funds. The fraudster may even allow the “fattened pig” to make a small withdrawal, or may send phony financial statements to enhance legitimacy.
The Fraudster Cleans Out the Account
This is “the slaughter.” Once the scammer has achieved the hoped-for level of investment from the victim, they will clear out the account and vanish.
Pig Butchering Is Organized Crime, Pure and Simple
Pig butchering scams are not run by amateurs. Because the payouts can be high, this is organized crime we’re talking about, with a lot of infrastructure behind it. The operations have technical resources to build and run spoofed websites and apps, as well as rooms of people blasting out messages to lists of contacts purchased on the dark web.
The schemes often use human trafficking to drive their operations. People are lured from their homelands with the promise of well-paying jobs before they’re beaten into submission. It’s a horrendous situation.
4 Ways To Avoid Falling Victim to Pig Butchering
The FBI says individual victims have lost anywhere from tens of thousands to millions of dollars through pig butchering scams that have used cryptocurrency as part of the pitch. Here are four tips for keeping your guard up, no matter how good the opportunity sounds.
- Just say no. Don’t invest in anything based merely on advice from someone you just met on an app or an “old friend” who called out of the blue. This is especially true if the person won’t meet you in person or via video chat.
- Be skeptical. Avoid anything with guaranteed rates of return or promises you’ll double your money.
- Spend time on research. Any time you invest in anything, you need to do thorough research. Seek trusted, longstanding outlets that have a proven track record with crypto. Checking domain registrations can help you determine if a website has been around for years or was launched a month ago. Likewise, investigate whether phone numbers are virtual using freecarrierlookup.com. Virtual numbers may indicate they’re owned by unsavory actors.
- Get educated about crypto. The world of digital currency is a confusing place. If you’re new to it, learn how it works. In reference to pig butchering scams, it’s important to understand that crypto is stored in virtual wallets that can be hosted by an exchange or on your computer (self-hosted). A scammer will try to get you to use a self-hosted wallet, which is free from the fraud detection services an exchange will provide.
What To Do if You’re Stung
Keep all evidence of fraud, including texts, voicemails, transaction numbers, screenshots, documents and URLs.
File a complaint with the Federal Trade Commission or the FBI’s Internet Crime Complaint Center (IC3). Act quickly. The faster you report the crime, the more likely you are to recoup your money, authorities say.
The FBI warns victims not to pay for services offering to help recover funds lost to scams. You could find yourself in the thick of yet another rip-off.
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