February 15, 2023 -- With the chocolate-scented haze of Valentine’s Day over, it’s a good time to rethink those online romances.
The Colorado Division of Securities is alerting the public about online romance scams that are sweeping the country. These romance scams are rapidly becoming more popular in the U.S. with an estimated $429 million in losses in 2021.
One version, self-named by the perpetrators as “pig butchering,” involves slowly “fattening up” victims with romance, praise, intimacy and trust, and then butchering – ruthlessly conning the victims out of money through an initial investment and exorbitant withdrawal fees.
Pig butchering is a highly scripted, contact-intensive scam executed by a vast ring of cryptocurrency scammers who mine dating apps and social media sites in search of victims. They create fake profiles to reach victims on social media, WhatsApp, Tinder or other dating sites, and even random texts, masquerading as an incorrect number or an old acquaintance. The goal is to initiate contact with the victim, attempting to become a “new friend” or “lover”.
The scammers slowly develop the relationship, insert themselves into their victims’ daily lives and casually introduce the idea of making a business investment using cryptocurrency. The new friend employs persuasion rather than directly requesting money, and the victim is gradually drawn into what appears to be a benign conversation. Then the butchering begins. Money is invested and fake fees are charged to extort more money. In the end, no or little money is ever returned to the investor.
Here are some red flags to look out for:
- Your new friend never attends a live video chat or shows up in person. There is always some excuse why their camera is off or they can’t make it in person.
- Other people vouching for the investment or involved with the investment also only communicate through phone, chat or email. No one shows up on live video or in person.
- Withdrawal fees– Once you invest, there may be a fake website showing how much money you’re making but when you want your money back, you are told you need to pay a fee to withdraw.
- You pay the fee, then there are more fees, one after the other.
- You don’t get any money back or you get a small amount to lull you into paying more fees. You lose your initial investment plus all the fees you paid.
What can you do to protect yourself? Here are steps you can take:
- Keep your social media presence limited to people you know. When people have public social media profiles with detailed personal information, they leave themselves open to scammers who can use the information to run a con.
- Don’t send money or cryptocurrency to anyone based solely on the recommendation of online contacts.
- Be suspicious of strangers reaching out to you out of the blue.
- Be wary of people chit-chatting casually about their insider investment knowledge.
- Don’t throw good money after bad. If you got caught in the scam, don’t pay extra fees.
- Collect information, keep screen shots and communications from people you meet online especially if it looks like money or personal information will be involved. If they are a scammer, you will have information to provide to the authorities.
If you suspect anything, disengage immediately. Block them and delete them.
For more information on how to protect yourself, go to the Colorado Division of Securities’ microsite on investor protection: protectyourinvestments.colorado.gov.
If you or someone you know have invested and have been scammed online, you can report them to the Colorado Division of Securities at https://securities.colorado.gov/file-a-complaint or to the FBI Internet Crime Complaint Center (IC3) at https://complaint.ic3.gov/.
The Department of Regulatory Agencies (DORA) is the state's umbrella regulatory agency, charged with managing licensing and registration for multiple professions and businesses, implementing balanced regulation for Colorado industries, and protecting consumers. Our nearly 600 employees are dedicated to preserving the integrity of the marketplace and promoting a fair and competitive business environment throughout Colorado.
The Division of Securities exists to protect investors and maintain confidence in the securities market, while avoiding unreasonable burdens on the marketplace by licensing securities professionals, enforcing securities law violations, and helping Coloradans become more informed investors.