"The Pig Butchering Scam:

A Growing Threat to Your Finances"

Have you ever received a call or message from any stranger on your phone or Whatsapp or social media who told you that they had dialled your number or messaged you by mistake and then, they later tried to engage you in some sort of emotional conversation or chatting in which they eventually discussed great investment opportunities to help you make easy money and quick profits.If yes, then, this is a typical scenario of an online investment fraud known as the pig-butchering scam which is causing unprecedented financial losses to the victims and therefore, warrants immediate analysis to understand the modus operandi of the scammers in order to find ways to prevent being a victim of it.

The rapid expansion of digital platforms in the 21st century has given the netizens the unique opportunity to engage in trading activities in the constantly evolving financial marketsworldwide. With the advent of technology, the cyber criminals have also started devising innovative ways to target and deceive unsuspecting investors and rob them off their hard-earned money.India's swift embrace of digital technology has led to a large number of people becoming potential targets for online scams. As millions access the internet and smartphones for the first time, many are unprepared to recognize and avoid online threats due to a lack of digital literacy.

Researchers at the University of Texas estimate that pig butchering scams have amassed at least $75.3 billion since January 2020, though they admit the actual total could be higher.In 2021, the FBI’s Internet Crime Complaint Center reported over 4,300 cases of pig butchering scams, with losses exceeding $429 million.No matter what the true figure is, the effect is undeniable: scammers are successfully siphoning massive amounts of money from numerous victims, with cryptocurrency being the primary vehicle for these illegal earnings.

Pig-butchering scam, also referred to as ‘sha zhu pan’ scam, is believed to have originated in China in year 2020 and from thereit later spread to many other Asian countries with a global footprint these days. This type of scam combines investment schemes, romance scams and cryptocurrency fraud. 

The pig butchering scams can be understood as a type of online investment fraud in which the scammers typically create fake online profiles with a deceptive emotional appeal and trap the victims by luring them to invest in fraudulent investment schemes with false promises of sky-rocketing financial returns. The name ‘pig-butchering’ has its origin in the modus operandi of scammers who resort to ‘fattening up’ of their targets/victims by building trust and emotions with them over a long period of time before finally ‘slaughtering them’ and running away with their hard-earned money.
 

In a 'pig butchering' scam, thescammers create fake ‘believable’ profiles on social media or glamorous accounts on dating apps to gain trust of their targets, often pretending to care about the victim by employing social engineering tactics, and then convince them to send money for fake opportunities. The scammers pretend to be a friend or romantic partner of the targeted victimin order to trick them into sending money for fake investments, job offers, or other schemes.Once a relationship of trustgets established, the scammer typically introduces cryptocurrency into the conversation. Instead of directly asking for money or cryptocurrency, they offer to help the victim with investment advice. They then direct the victim to transfer funds to different platforms, often controlled or created by the scammer. The targeted victim – proverbial ‘pig’ is often encouraged by the scammers to download some apps or use fraudulent investment platforms that look deceptively legitimate.  This marks the start of the "butchering" phase of the scam.Victims often start by transferring small amounts to a cryptocurrency exchange. To keep up the deception, scammers provide fake account details that show the victim's investments increasing in value. They may even allow the victim to withdraw a portion of their initial investment to make the scheme seem legitimate. The scammers then continue to push the victim to send more money until they are completely drained of funds.The scammer keeps persuading the victim to invest increasingly larger amounts, effectively "fattening the pig."Emotional manipulation plays a key role in pig butchering scams. Scammers aim to make the victim believe they are missing out on a rare, lucrative opportunity. Once they get or steal the money, the scammerssimply disappear and stop all sort of communication with the victims. Sometimes,victims often attempt to withdraw their investments, only to be informed that they must first pay steep fees or taxes or penalty charges. By this stage, the scam has reached its conclusion, the funds are lost, and the scammers have already shifted their focus to new targets.

Pig-butchering scamsters also use the group chat tactic which involves scammers adding numerous people to investment-focused chat groups to assess their interest. Those who stay in the chat groups are seen as potential candidates for scams, while those who leave are either aware or uninterested. Scammers use fake profiles within these groups to create a sense of legitimacy and community, making it easier to target those more susceptible to their schemes. This tactic fosters an illusion of social validation, as potential victims see others engaging in investment discussions without challenging the scam, thus building their trust in the deceptive investment schemes.

The criminals running pig-butchering scams are largely dependent on forced labor, with tens of thousands of people being coerced into running scams in Cambodia and Myanmar. Criminal syndicates often use social media to lure unsuspecting individuals with promises of lucrative job offers in Southeast Asia. Once these individuals arrive, they are taken hostage and forced to participate in pig butchering scams, frequently under threats of violence. Much like the scam victims, the families of those held captive are often forced to pay ransoms in cryptocurrency to secure the release of their loved ones.

We can fight these scams through a mix of investor education, social media awareness, regulatory measures, and individual vigilance.

The following tips and guidelines can help us avoid becoming a victim of such scams -

1. Avoid engaging with unknown contacts: Refrain from responding to unsolicited messages on WhatsApp, social media, or dating apps. Be cautious about downloading apps or clicking on unfamiliar links.

1. Be alert to emotional manipulation: Scammers often play on emotions like hope, fear, or greed. It's crucial to remain calm and avoid making impulsive financial decisions based on enticing offers.Always make sure to do thorough research and stick to trustworthy investment platforms before putting your money on the line. Don’t let the promise of quick wealth cloud your judgment.

1. Stay grounded and think critically: Scams often exploit your emotions, so it's important to think critically and not react hastily to offers that seem too good to be true.Financial literacy campaigns and educational programs are essential in equipping potential investors with the skills needed to spot warning signs and make well-informed decisions.

1. Seek help when needed: If something feels off, visit the nearest police station or consult a legal professional for guidance.

1. Exercise caution with offers: Be skeptical of promises of high returns or job opportunities. Never share sensitive personal or financial information, such as your PAN, Aadhaar number, passport, or bank details.

1. Trust your instincts: If an offer seems too good to be true or raises any doubts, be cautious. Protect yourself by avoiding further communication if you're uncertain about the source or the other party's intentions.Always remember, if an investment promises you guaranteed, unusually high returns, it's likely a scam. Genuine investments carry risks, and returns are never guaranteed.

Social engineering scams like pig butchering prey on psychology, curiosity, and trust. To avoid falling victim, always take your time and never act impulsively under pressure. Ignore unsolicited calls or texts from unknown numbers, and verify any web links or contact details before engaging, especially when dealing with financial services. Try to search for the company’s reputation on Google. Be cautious with new acquaintances, particularly if they bring up cryptocurrency investments. Never share personal details such as your bank account information or passwords with anyone online. Only use verified investment platforms and ensure they are registered with regulatory bodies.Be wary of scams promising high, quick returns. Avoid making any transactions that require upfront payment in cryptocurrency. Additionally, steer clear of combining online dating with investment advice from individuals you've never met in person.Understanding and recognizing the tactics used in pig butchering scams, such as group chat manipulation and emotional exploitation, is crucial for protecting oneself from these deceptive schemes. By staying informed and cautious, individuals can better safeguard their financial and personal well-being from the sophisticated strategies employed by scammers.Lastly, avoid cryptocurrency investments unless you're thoroughly knowledgeable and confident in the platform’s legitimacy.

Apart from the above guidelines, there exists an urgent need to have a proper regulatory policy in place at the national and global level in order to streamline and effectively regulate the working mechanism of the cryptocurrencies ecosystem. The policymakers must show due diligence and proactiveness to tackle the illicit activities facilitated by the unregulated world of cryptocurrency.

Public education is also very crucial in preventing pig butchering scams. When people recognize the warning signs and understand the scam's mechanics, they are less likely to fall victim. The challenge lies in effectively reaching a broad audience and encouraging those who are informed to share this knowledge within their families and social networks.By promoting a culture of digital awareness and cyber vigilance, we can protect the global financial system and individual investors from the harmful effects of pig-butchering scams.