Combatting the Rise of Cyberscams

Combatting the Rise of Cyberscams

Increasingly sophisticated digital fraud requires more public-private and international cooperation.

 

In a more interconnected globe, people with access to digital devices are now highly exposed to cybercrimes. The United States has become the favorite target of these. In 2022, cybercrime cases reported in the United States numbered over 800,000, and the losses amounted to $10.3 billion. In Europe, meanwhile, scammers stole $505 million by targeting the French-speaking population across France, Belgium, and Luxembourg. Amid increasing cybercrimes, citizens look towards the state, yet even governments find it difficult to keep up with the volume of scamming operations and the increasingly sophisticated tactics scammers employ.

To make matters worse, these fraud operations emanate from countries far outside the jurisdiction of their victims. Weak cybersecurity and physical governance add to the issue’s complexity. The problem of decentralized or absent state authority in various places allows nonstate actors to organize effective criminal syndicates. It is apparent that more must be done.

 

The Art of Pig Butchery

The cybercriminal’s technique of choice is what is called “pig butchering.” It originated in China, where it is known as Shā Zhū Pán, and has spread worldwide. It is also known by other names, such as “romance baiting,” “crypto romance scam,” and “cryptorom.”

The technique is analogous to fattening a pig for slaughter. Scammers use dating apps, random text messages, websites, social media, WhatsApp, Google chat, and Telegram to approach potential target users. The operation proceeds by systematic steps, starting with a fake identity. The scammer asks for a small investment in cryptocurrency. Victims initially see good returns and subsequently increase their investments. This scam is distinct in its spillover into extended social circles as the victim borrows from friends and relatives and sells properties, stocks, and assets to invest more in the supposedly high-return schemes. Pig butchering scammers usually fabricate applications, dashboards, websites, and games and otherwise spin a false sense of legitimacy over regular long-term virtual interactions.

The number of cases grows yearly. According to the Global Anti Scam organization, around 66 percent of people affected by cyberscams are educated. The complexity of the pig butchering scams makes it even more challenging to counter, and it is apparent that these “scammers appear to be operating multiple scams either in succession or in conjunction.”

The pig butchering industry is becoming more prominent yearly and attracts many workers looking for lucrative employment. Many hail from the Southeast Asian region and beyond, including ChinaPakistanIndonesia, and Thailand. Potential workers are tricked by false promises of better pay and are forced to labor under physical and verbal threats. Even more worrying is the scamming industry has integrated itself with other criminal activities. The former Golden Triangle area encompassing Myanmar, Laos, Thailand, and Cambodia, once known for the production of opium, is now emerging as the new nexus of human trafficking, the drug trade, and cybercrimes.

The Butcher’s Bill

The Global Anti Scam Organization states North America is home to the most pig butchering cases, followed by Asia. The target demographic is often English and Chinese speakers outside of Mainland China. What makes pig butchering scams notably different is the targets, scale, and site of the scam.

First, the scams target well-off people. In 2022, romance scams led to a loss of $1.3 billion involving 70,000 people. Recently, Forbes reported on one U.S. citizen that was scammed out of $1 million. However, only 15 percent of people report the cases, and the number may be even more, as many people do not share their cases due to the stigma related to scamming operations and lack of hope in getting any returns back.

Second, the scale of the pig butchering scam is enormous, amounting to billions of dollars. An Internet Crime Complaint Centre (IC3) report stated that Investment scams in 2022 amounted to $3.31 billion, an increase of 127 percent from $1.45 billion in 2021. This rise is likely driven by the increase in pig butchering scams. The exact growth and data on pig butchering scams are difficult to estimate as these fall under different categories, such as cryptocurrency investment and romance scams.

Third, the site that is the operations of the scam industry is controlled from outside of the United States making it difficult to counter and stop these syndicates.

Steps Taken: Domestic and Global

We have seen some progress in dealing with the scams through existing mechanisms; however, much remains to be done. U.S. agencies like the FBI have established comprehensive tools like the IC3, where victims report cases, and the collected data helps identify trends. With increasing monetary losses, more people are reporting cybercrimes. Nonetheless, more awareness is needed. Better coordination through mechanisms like the Recovery Assets Team allows funding freezes which increase the possibility of investment recovery, with a success rate of 73 percent.

In addition, other steps, like the seizure of domains used for cryptocurrency fraud by the Department of Justice, slow the pace of cybercrimes. Yet, still more needs to be done, like better coordination between federal, state, and local agencies in addition to speedy prosecution. This calls for a whole-government approach and systematic coordination with the private sector. The private-public partnership is vital to enhancing cybersecurity. For example, Google Play and Apple stores feature pig butchering scam apps. This legitimizes their use and assures the users of their safety. Another vital step that needs urgent attention is increasing the number of people working on solving cyberscam cases, particularly pig butchering, which is more complex and takes time. Human capacity needs to be strengthened by giving proper education, training, allocating resources, and technical skills.

Another area is international cooperation in countering pig butchering scams, especially with ASEAN states, Cambodia, Thailand, Malaysia, and Laos, as discussed in the Third US-ASEAN Cybersecurity Dialogue in February 2023. For this, the US can leverage its relations with states like Singapore and Indonesia. Better coordination, information sharing, and financial support to local NGOs working against human trafficking and cybercrimes is another way the U.S. can address this issue.

Today, U.S. citizens are spending increasing amounts of time on social media. This activity boosts the likelihood of cybercrimes, particularly pig butchering. Even though cyberscam losses dropped drastically from $10.9 billion in 2021 to $5.9 billion in 2022, these are the results of the crypto currency’s declining market performance and not systematic prevention. Romance scam cases remain unaffected by this larger trend, which targets high-worth individuals. In addition, the scams’ scope, scale, and origin add to the difficulty. Recent steps taken by the U.S. government to stop cybercrimes have not resulted in a significant decrease. Therefore, systematic and institutional changes are needed to counter the rise in cybercrimes, such as workforce training and better integration and coordination between investigating agencies and big tech at local and national levels. International cooperation is another challenge that needs focus, particularly with ASEAN states. Recent steps and developments have induced optimism, as reflected in the National Cybersecurity Strategy.

However, whether the changes wrought to counter these scams will work remains to be seen.

Abhishek Sharma is a Non-resident Kelly Fellow at the Pacific Forum and a Ph.D. candidate at the University of Delhi. His research focuses on the intersection of critical emerging technologies and geopolitics in the Indo-Pacific region, particularly Cybercrimes and Cyber strategies. His work has been published by the NK News, South China Morning Post, 9Dashline, Observer Research Foundation, and The Diplomat.

Image: Shutterstock.