Romance Frauds

In 2023, the FBI reports, losses to crypto-asset-related investment frauds rose to $3.96 billion. A large part of that total is due to a sophisticated online confidence scam (a.k.a. romance or relationship frauds) operated by international criminal gangs. Fraudsters will contact you through wrong number texts, dating apps, or through commonly used social media platforms. Your new “friend” will be attractive and rich supposedly due to trading digital commodities or forex. After weeks of communications, the new friend will encourage you to invest as well. Initially, you will think you are making money, so you will invest more. Once you have nothing left to invest, your money and friend will disappear. The perpetrators of this scam refer to it as a “pig butchering” fraud.

Protect yourself by not sending money to people you have only met online and by reverse image searching the photo of your new friend.

The Setup

You meet an attractive stranger online through social media, a dating site, or through a random text message, and before you know it, you’re texting every day but you never see each other in person or even on video chat. Your new friend is rich, attractive, travels, and likes everything you do. How did they become so wealthy? By trading, and they can show you how to do it too.

The Scam

You’ll have to make your deposits in bitcoin or stablecoins, but your friend shows you how and then tells you to transfer the crypto to a trading platform you’ve never heard of before. You invest a small amount and it quickly returns big profits just like your friend said it would, and you’re convinced to invest more, even if it means emptying your retirement savings, getting a loan on your house, or borrowing from others.

Your account continues to climb and your friend keeps encouraging you to invest more. If you mention withdrawing money, the person tries to convince you it would be a big mistake or gets angry. There could also be threats, or attempts to blackmail you with compromising photos or things you’ve said. When you try to withdraw your money, suddenly there are technical problems, or undisclosed taxes and fees that must be paid out-of-pocket first. Or, your requests are simply ignored. The trading site, your “friend,” and the profits are all fake, designed to build your trust and take as much of your money as possible.

Do's and Don'ts

The Do's

The Don'ts

Do keep the conversation on dating or social media platforms.
Do reverse image search the picture of your new friend.
Do thoroughly research people or firms before you trade.
- Are they registered with federal or state authorities? Relying on registration alone won’t protect you from fraud, but most scams involve unregistered entities, people, and products.
- Can you find reliable third-party reviews online? Don’t trust on-site testimonials.
- Look up the site’s domain registration to see if its age matches its claims. If the entity displays a headquarters address, do a street-level online map search to see if it looks like a legitimate place of business.

Don’t trade or give money to people you only know online.
Don’t trade in markets or products you don’t fully understand. One of the best investments you can make is knowledge. Learning about markets, knowing the risks, and having a risk management plan -- including how much you can afford to trade and lose -- are the best ways to avoid fraud and make informed decisions.

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