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Emerging Misappropriation & Exploitation Scam: “Pig Butchering” Scam

Be on the lookout! There is a new type of Misappropriation and Exploitation scam on the rise nationally – and unfortunately we are starting to see it happen to those we serve in Summit County. The scam is referred to as “Pig Butchering.” Learn more about what this is and how to spot the warning signs.

What is a “Pig Butchering” scam?

According to The Financial Industry Regulatory Authority (FINRA), this scam is called Pig Butchering in reference to “the practice of fattening a pig before slaughter.” These scams often involve fraudsters contacting targets seemingly at random. The scam artists then gain a person’s trust before ultimately manipulating their targets into phony investments and disappearing with the money. These scams are often perpetrated by people outside of the United States, but many times will have local phone number or social media account. Per the FBI, in 2023 there were approximately 40,000 victims of this scam (with reported losses of over $3.5 Billion) just in the U.S.!

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How the scam works

  1. How it starts: The perpetrator will reach out to the target via Text, messaging applications, and/or social media pretending to be trying to contact someone else, and when the recipient responds, the perpetrator tries to start a conversation up with them to build rapport. These often look like attempts to start a romantic relationship or friendship with the target.
  2. Building Rapport: As the relationship develops, the perpetrator will attempt to learn personal information about the target that can be later used to manipulate them to send the perpetrator money via crypto, gift cards, or other cash applications. Per FINRA, “They might try to foster trust by sending pictures, talking about activities—such as volunteering—to demonstrate good character, or sharing fictitious life details that mirror your own. They might claim to be a widow, a single parent or even a member of the U.S. military living overseas, for example.”
  3. Next Phase: Per FINRA, The next step is for the perpetrator to “Entice you to put your money toward the “opportunity” they’ve shared” with the target. This will often look like investment opportunities, or the perpetrator asking for money so they can meet the target in-person or for some assistance they may need due to “hard times.”
  4. The Final Phase: Once the target has started sending the perpetrator money, the investment will either begin to show its true colors and crash or they will continue to ask for more money for their identified needs until the target begins to question them. If the target asks for their money back or questions what the money is really being used for, the perpetrator will often feign empathy with them and try to continue obtaining funds for different investments or stated purposes. Ultimately the perpetrator will “ghost” the target once they can no longer obtain any money from them.

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How to protect yourself and those you serve

Watch for the Warning Signs: It’s important to be vigilant. FINRA recommends looking out for the following red flags:

  • Unexpected contact: Never respond to unsolicited messages from unknown contacts, even about seemingly benign topics, especially via text message and on encrypted messaging applications.
  • Refusal to participate in video chats: If someone you’ve been messaging with consistently declines to interact face-to-face, they likely aren’t the person from the profile photo.
  • Request for financial information: Don’t share any personal financial information with individuals you’ve never met in person. If a new virtual friend or romantic connection starts making financial inquiries, put the brakes on the relationship!
  • Invitation to invest in specific financial products: Be wary of any unsolicited investment advice or tips, particularly from someone you’ve only spoken to online and even if they suggest you trade through your own account. Always question what a source has to gain from sharing tips with you and whether the transaction fits with your financial goals and investment strategy.
  • Unknown or confusing investment opportunity: Carefully evaluate the product, as well as the person and/or company requesting your investment. Along with a basic search, try adding words like “scam” or “fraud” to see what results come up. Consider running these new recommendations by a third party or an investment professional who has no stake in the investment and use FINRA BrokerCheck to see if the promoter is a registered investment professional.
  • Exaggerated claims and elevated emotions: Take a closer look at any investment that offers much higher-than-average returns or is touted as “guaranteed.” Fraudsters will also often use their knowledge about you to appeal to your emotions—something like, “Don’t you want to have money to send your kids to college?

How you can help

We are starting to see these types of scams perpetrated in Summit County with those we serve. In Summit, these have presented as PPIs posing as celebrities or possible romantic partners asking for money from individuals served to help them with medical or living expenses. Be on alert if someone you serve starts talking about a new “friend” they met randomly via text or social media.

Engage the team process.  This can help the individual understand what is happening to them and how to protect themselves, if you fear they may be a victim to this scam. If you learn of any money being given by the individual served to these potential PPIs, make sure to follow you MUI procedures.

For More information, you can visit FINRA’s website information about the Pig Butchering Scam

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