Scammers Are Now More Convincing. Americans Have Lost Over $5 billion To Them

The Federal Trade Commission (FTC) reports that in 2024, Americans lost $5.7 billion to investment frauds.

“Pig-butchering scams” are a prevalent type of investment fraud in which scammers establish a rapport with their victims, lure them into making an investment, and then defraud them.

According to the new FTC data, consumers lost $5.7 billion to investment scams last year, which is more than any other form of fraud and up 24% from 2023.

Claims that a consumer will receive large returns by investing in a trendy new moneymaking technique are typically found in investment scams.

According to the FTC, 79% of victims who reported investment scams to the agency lost money, with the average victim losing over $9,000.

After accounting for those who choose not to come forward, the actual extent of investment fraud is probably much greater because FTC statistics is dependent on customer reports of fraud.

According to John Breyault, the vice president of public policy, telecommunications, and fraud for the National Consumers League, these scams are becoming a major problem for consumers.

In fact, cryptocurrency and artificial intelligence (AI) are contributing factors to investment fraud. The scammers often approach victims unexpectedly, either through text, social media, or a dating app, in an attempt to build relationships and gain trust before offering investment opportunities that are supposed to yield high returns, often in virtual assets like cryptocurrency, experts said.

Although the investments may appear legitimate, criminals eventually vanish with the victims’ money. Deepfakes, which are manipulated videos or other images or sounds that allow people to say and do things that appear real but are not, have made it easier for criminals to commit these and related frauds.

According to the Council on Foreign Relations, organized crime groups have also set up hubs for scam operations throughout Southeast Asia, particularly in Cambodia, Laos, and Myanmar.

According to the report, the centers employ thousands of people who are frequently trafficked unlawfully and coerced into carrying out these investment schemes all over the world.

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Because bitcoin allows criminal networks to “transfer considerable amounts swiftly, cheaply, and without much risk of detection,” they frequently utilize it to enable pig-butchering scams, according to a recent study by academics at the University of Texas at Austin.

How to reduce the danger of investment fraud:

According to Breyault, there are ways for customers to lower their risk even though there is not a simple solution to prevent fraud. According to him, many scammers share the following three traits:

• Be wary of any pitch that has a form of urgency attached to it. The FTC warns that scammers “want you to act before you have time to think. … They might threaten to arrest you, sue you, take away your driver’s or business license, or deport you. That’s not all, they might also say your computer is about to be corrupted.”

• Unusual payment method. Scammers often ask victims to pay in specific or unusual ways. They often insist that you can only pay by using cryptocurrency, wiring money through a company like MoneyGram or Western Union, using a payment app, or putting money on a gift card and then giving them the numbers on the back of the card,”
Isolation.

• Scammers will try to isolate victims so they don’t tell other people about the circumstances who might alert them that it’s a scam. They might say things like, “‘No one will believe you if you tell them about this,’ or ‘the cops will come get you if you report it,’ or ‘your loved ones will be in danger,'” Breyault said.