In recent times, scammers have found newer ways to rip people off. However, the most common is Romance Scams. Not just any kind, cryptocurrency is now being used to receive scam proceeds. And, this is due to the fact that crypto is such a convenient channel to do so because there are almost no paper trails. Despite efforts to curb fraud, it has steadily seen a rise.
A romance scam simply includes a fraudster establishing a phony internet presence and exploiting it to earn the confidence and possibly, using it to gain the trust and affections of the chosen victim. It's a simple case of manipulation, they appeal to the emotions of the chosen victim to convince them to send money wheresoever they choose.
The following chart is based on a report by Chainalysis based on the active crypto scams in the last 5 years; 2017-2021. Based on this report, we can see that there has been no decline at all, and I can’t help but wonder, can this ever be resolved? Is this the new norm?
According to a report by the Federal Trade Commission(released on February 10th, 2021), between 2020 and 2021 money lost to romance scams increased by a whooping ~80%. In the last five years, the total loss has reached $1.3 billion.
Victims who transferred funds to these fraudsters using cryptocurrencies lost up to $139 million as of 2021. This is considerably more than any other payment amount.
Personally, I have read of cases where the victims expressed shock because they always bragged about how they could never fall victim to these internet scams. But, the truth is with each passing day, these fraudsters are getting quite good at their game. And, no, it is in no way a positive thing.
The most common method we have seen is scammers seeking the lonely by claiming to be in the marine or military. What they do is ask for money to pay for service-related fees like medical fees, transportation costs, and so on. In this regard, cryptocurrency is the most preferred payment gateway.
While cryptocurrency is a popular means amongst scammers, it can also get very difficult and expensive to use, especially if it is the very first time. So, romance fraudsters would rather stick to simpler methods such as gift cards or bank transfers.
Also, these romance fraudsters now have another technique to receive the funds from chosen victims, and that's to have them transfer the crypto using crypto ATMs.
In my next LeoFinance post, I’ll be writing about “Pig Butchering”. A term that describes one of the most recurrent crypto romance scams. Here, a fraudster creates a bogus profile on a social media platform; could be a dating site, forms a relationship, gets them to trust him or her, then goes on to present an 'investment opportunity under the guise that they have their best interests at heart.