What to Know About Pig Butchering Scams

 Mike Esson By: Mike Esson
What to Know About Pig Butchering Scams

In the ever-evolving world of financial fraud, a new investment scheme with an unusual name has emerged. Known as the "Pig Butchering" scam, this term, as unsettling as it sounds, metaphorically represents the methodical way scammers fatten their victims' trust before going in for the financial slaughter, often in very sophisticated ways. 

We take keeping our clients’ data safe incredibly seriously here at Plancorp, but understand that we are only one component of your life. We want our clients to be aware of this scam to safeguard their hard-earned wealth.

Understanding the Scam

The Pig Butchering scam is complex and meticulously crafted to deceive. These extended, elaborate scams have fooled even the most cautious and astute individuals. Scams often begin with a friendly text message, or DM on a social media platform, a swipe on a dating app, or an email. 

This might begin with a unique text sent for the wrong person, i.e. “Did John get in touch with you about dropping off donuts for the office?” This is designed to make you put your guard down and reply letting them know they have the wrong number. They usually apologize and then take the opportunity to try to make a connection with you.

In another version of the same scam, the scammer might comment on a public post, respond to a story, or directly message you. The scammers exude trustworthiness and gradually build a relationship with the target. This simplicity belies the sophisticated nature of the deception involved. 

Regardless of how they begin, over time, they introduce the concept of something like an investment opportunity, encouraging the victim to invest small amounts in cryptocurrency or other financial ventures.

One of the most shocking aspects of these scams is the involvement of third-party applications. Scammers direct their victims to what appears to be a legitimate investment opportunity, often facilitated through an app or a website. As trust grows, so do the investment amounts until the scammer disappears with a substantial sum of the victim's money.

These platforms are convincingly designed, with professional-looking interfaces, user reviews, and customer service agents, making them appear trustworthy. This tactic cleverly shifts the victim's trust from just the individual scammer to a seemingly reputable company or platform. 

The victim believes they are making a sound investment through a legitimate third-party service, not realizing that the scammer orchestrates the entire setup. 

These platforms' sophisticated design and functionality make detecting fraud challenging for even the most discerning individuals. When the victim realizes the truth, it's often too late, and substantial financial damage has already occurred.

It's a stark reminder that in the digital age, appearances can be deceiving, and even the most professional-looking platforms can be fronts for sophisticated financial scams.

And before you dismiss the scam, consider the case of Shan Hanes, the CEO of Heartland Tri-State Bank. His bank failed after he became entangled in a pig butchering scam.

"Heartland Tri-State Bank failed because of alleged fraudulent activity conducted by the bank's chief executive officer, who initiated a series of wire transfers totaling about $47.1 million of Heartland's funds, among other suspicious activities, as part of an apparent cryptocurrency scheme referred to as 'pig butchering,'" the report said.

Critical Characteristics of Pig Butchering Scams

  • Unusual Grammar: This isn’t universal, but scams this elaborate are typically run through foreign groups and you may notice unusual grammar, spelling, or misunderstanding of common terms. Just like in traditional phishing or smishing scams, this is a red flag.
  • Rapport Building: Unlike traditional scams that lead with urgency to throw off your judgment skills, pig butchering scams involve a slow build-up of trust over weeks or months.
  • Use of Social Platforms: Scammers leverage social media, dating apps, or messaging platforms to initiate contact or gain more information to make a connection with you. Consider what someone might be able to learn about you based on public platforms like Facebook or Instagram.
  • Financial Advice: The scammer presents as a successful investor or financial advisor and then proceeds to guide the victim in making lucrative investments.
  • Growing Investments: Initially, small investments are encouraged, but as the the scammer gains more trust, the suggest larger amounts.
  • Urgency and Secrecy: There's often a push for urgency in investment decisions, combined with a suggestion to keep these opportunities private.

How to Avoid Becoming a Victim of Pig Butchering Scammers

  • Verify Identities: Be cautious of online relationships, especially those that quickly turn to financial discussions. With the advancements in AI technology, it's easier than ever to create and verify a fake identity. Be sure to use multiple methods to verify that the person you're speaking with is truly who they say they are.
  • Beware of Unsolicited Advice: Be skeptical of unsolicited investment advice, especially from new online acquaintances.
  • Research Investments: Independently research any investment opportunity and consult a licensed financial advisor. Chances are if something seems too good to be true, it is.
  • Keep Personal Information Private: Never share sensitive financial information with someone you've met online and be cautious about entering personal information in unfamiliar third party applications.
  • Trust Your Instincts: If something feels off, it likely is. Don’t ignore red flags. Be wary of high returns with little or no risk.
  • Stay Cautious in Texts: As more things move from email to text message, keep the same senses you’ve developed to spot scams via email in texts. 

The Psychological Play

Scammers are adept at psychological manipulation, often using tactics like creating a false sense of urgency, playing on emotions, and mirroring the victim's interests and values. 

This manipulation starts by them choosing something like text or WhatsApp to communicate. Over the years we’ve all become more adept at spotting scammers in emails, but data shows most have their guard down when it comes to texts. Compound this with the practice of sharing 'personal' stories to create a deeper emotional bond and making their financial advice seem more trustworthy and tailored to the victim's situation is a dangerous combination. 

Understanding the psychological manipulation in these scams is crucial. Scammers exploit the human tendency to trust and the lure of financial gain. They use the time invested in the relationship to create a false sense of security, making the victim more susceptible to their ploys.

What to Do If You Suspect an Investment Scam

If you realize you've been scammed, act immediately. Contact your bank to stop any transactions and alert them to the fraud. Report the scam to appropriate authorities like the FBI's Internet Crime Complaint Center. 

Changing your online banking passwords and monitoring your accounts for any unusual activity is also advisable. Beyond that, you should also take these steps:

  • Cease All Communication: If you suspect a scam, immediately stop communication.
  • Report the Scam: Report to relevant authorities, such as the FTC, the FBI's Internet Crime Complaint Center, or local law enforcement.
  • Document Everything: Record all communications and transactions.
  • Consult a Financial Advisor: Seek professional advice to understand the implications and steps to take.

Best Practices for Online Financial Cyber Security

In the face of rising financial scams, particularly Pig Butchering scams, it's vital to adopt robust online cybersecurity practices. Recent data reveals a startling increase in the number of individuals impacted by such scams, with thousands falling victim each year, leading to $75 billion in losses. These numbers serve as a stark reminder of the prevalence and impact of these fraudulent schemes.

It's easy to assume that you would never fall victim to such manipulation tactics. However, the truth is that these scams are designed to deceive even the most vigilant and educated individuals. There is no shame in falling prey to such sophisticated scams. The crucial part is recognizing the deception, staying aware, and responding appropriately.

One of the simplest ways to safeguard against various online scams, including Pig Butchering, is to always ensure your computer and phone have updated security software. Don’t delay these updates for months as you could be missing out on threat detection advancements within your software.

Be cautious about sharing personal information online. Regularly check your financial statements for any unusual activities, and consider setting up alerts for large transactions.

Also be wary of anyone you don’t know well pitching you on cryptocurrency investments. We are more than happy to help evaluate any opportunities you come across.

Avoiding Pig Butchering Schemes and Other Crypto Scams

Pig butchering scams are a sophisticated and psychologically manipulative form of financial fraud. Awareness and education are crucial to protecting oneself from these scams. Always approach online relationships and investment opportunities with caution and due diligence. 

The best way to stay secure is to be vigilant and avoid falling for the scam in the first place. Even better, if collectively we all fall for this scam less often it becomes less lucrative and can phase out entirely.

Remember, if an investment seems too good to be true, it probably is. Stay vigilant, stay informed, and safeguard your financial future against predatory tactics. 

As Plancorp's Chief Information Security Officer, Mike oversees the integrations, efficiencies and security of our internal processes. He draws on years of experiences in sales, operations, compliance, technology, cyber security, and data protection to optimize our workflows and safeguard our data. He works closely with other teams and resources to manage diverse projects and implement ongoing strategies. When he is not working, he loves spending time with family and friends. He is an outdoor enthusiast and a handyman who loves to create and repair things in his spare time. More »