Financial grooming (sometimes called “pig butchering”), is a sophisticated social engineering fraud which poses significant risks to individuals, corporations, and government agencies alike. This typology involves a combination of relationship scams, criminal organizations, and the brutality of forced labor.
The contemporary romantic financial grooming scam has evolved from the typical romance/investment scam. It involves long-term relationship building to gradually manipulate large numbers of victims, often exploiting individuals subjected to modern slavery. These scams, which are complex and operate in several high-risk jurisdictions, have become an industry in themselves. The networked nature of these crimes makes detection and prevention challenging.
As the pandemic unfolded in 2020, financial grooming scams emerged in different regions, with scams often posted within popular local apps to ensnare victims, exploiting emotional connections using personalized outreach.
Initially, these scams were controlled by smaller, more localized gangs, but as they proved profitable, more established, transnational organizations took interest, scaling the scamming operations and expanding this fraud globally.
In the past year, many have been the targets of seemingly benign fraudulent text messages: “Hey Pam, we have your order ready” or “So sorry for my delay, I’ll have the papers ready for you soon.” Many of these text messages are just the beginning of this scheme for those who fall for its deception. Romance scammers often initiate contact through SMS text messages, attempting to build trust with their potential victims, then quickly try to transition the conversation to instant messaging services or chat apps. This allows the scammer to log in and log out multiple times from several devices simultaneously without the fear of losing their victim’s data.
Another angle of scammers is to advertise high salary jobs to lure applicants who then find themselves in forced labor conditions, working in scam factories creating fake messages and forging fraudulent relationships.
Meanwhile, on the other side of the equation, victims fall for the scam messages. The FBI estimated that in 2022, losses through investment scams totaled US$3.31 billion, with the actual number likely higher due to underreporting.
The issue doesn’t stop there. After falling for the initial scam, victims are often targeted by asset recovery scams, where fraudsters promise to recover the victim's money. These victims become part of a database circulated among various criminal networks, making them targets for further attacks. As a result, individuals can exhaust their savings and plunge into debt to pay for their so-called recovery fees, only to discover they have been defrauded again.
Moody’s Analytics Grid database offers a unique insight into financial grooming scams. In Grid, risk information is curated into detailed profiles by individual or organization, so one can see all associated, risk-relevant data in structured and detailed reports. The data is then categorized into typologies to indicate different types of risk. Cybercrime events recorded in Grid have surged over 1,000% globally from 2013 to 2022. Zooming in on a shorter timeframe, global cybercrime events saw a rise of 175% from 2018-2022. This is a widespread trend.
Fig 1. Global rise in cybercrimes, 2013 – 2022
Grid also shows nearly 11,000 confirmed risk alerts for human trafficking were issued in 2023. Certainly, some of those incidents were attempts to sustain the relentless demand that scam centers generate, a constant supply of labor is needed - many of the workers in the scam centers are victims of trafficking and forced labor. Modern slavery is being exploited by criminal groups to ensure there is a sufficient workforce to carry out financial grooming and execute their romantic financial grooming scams.
Romance scammers are often in the news before they’re on a list. Uncover hidden risk relevant to your operation with our adverse media database, which monitors from the earliest indication of risk, from accusation through conviction.
A unified approach to risk identification and management is needed for organizations to help combat this kind of escalating risk. This holistic approach to fraud includes: