How to Protect your Wallet on Valentine's Day and Avoid Romance Scams

TL;DR

• Online dating continues to grow in popularity but there has been a surge in romance scams.

• Romantic scammers also use crypto as a means of extracting money from their victims. 

• Binance remains committed to combating scams in the industry by implementing strong security measures, compliance, and user education efforts.

Today is Valentine's Day, a celebration of love and connection. However, despite it being a day of celebration of love, scammers take advantage of it to steal money from their victims. 

Thanks to the advent of the internet, millions around the world now turn to online dating platforms or meet others through social media to kindle romantic connections. Despite the positive impact of these platforms, they also open the door to online romance scams.

How Romance Scams Work

Online dating scams, often referred to as romance scams or romance fraud feature criminals who adeptly masquerade as potential romantic partners, skillfully weaving webs of deception while exploiting the emotions of vulnerable individuals.

While commenting on this rising trend, Tigran Gambaryan, Head of Financial Crime Compliance at Binance, said,

“Imagine someone convinced they’ve stumbled upon a profound connection via a dating app or social media. These fraudsters morph seamlessly, echoing your every sentiment and aspiration with uncanny precision. They latch onto the nuances of your conversation, crafting personas that seem perfectly aligned with your ideal match. Mention your enthusiasm for a certain hobby, and suddenly, it’s their obsession too. Share your hopes for a meaningful relationship and a future together, and they echo your sentiments, professing their readiness for commitment. It’s as though they have a direct line to your thoughts, expertly reflecting your desires back at you. Reflecting on my experiences as a Special Agent, I see a striking similarity in tactics. These manipulations are not unlike the schemes I’ve seen where fraudsters sell lies to get their hands on your money. The essence of their approach remains the same: exploit trust and fabricate connections to achieve their deceitful ends.”

Some of the profiles on dating platforms are fake and the users behind them are scammers. These scammers are experts in manipulation and gradually building trust, all with the ultimate aim of extracting money or stealing personal information.

Romance Scams on the Rise

As the world becomes more connected than ever, romance scams continue to rise. Globally, more than 1 in every 4 adults surveyed for the 2023 Norton Cyber Safety Insights Report reported having been victim to an online dating or romance scam.

In the United States, the  Federal Trade Commission received 11,235 dating and romance scam complaints in 2016. This figure had skyrocketed to 52,593 cases by 2020, a 368% surge within four years. In 2022, the situation escalated even further, witnessing a more than 30% year-on-year surge. Nearly 70,000 individuals reported falling victim to these scams, resulting in a cumulative loss of $1.3 billion.

According to the FTC report, while most scammers don’t use cryptocurrency as a payment method, it still accounts for a substantial 34% of the total reported losses. The use of cryptocurrencies for criminal activities constitutes only a small fraction of global transactions and is, in fact, in decline.

According to Chainalysis' latest 2024 Crypto Crime Report, the share of all crypto transaction volume associated with illicit activity has decreased from 0.42% in 2022 to a mere 0.34%. 

This was achieved thanks to the effort put in by industry leaders such as Binance. These companies work hard to prevent and combat scams by maintaining strong security and compliance measures and educating users about common threats.

Binance’s 2023 revealed that romance scams made up roughly 2% of the total reported scam cases. Though this percentage might seem modest, the collective financial losses experienced by the victims surpassed tens of millions of USD, averaging nearly 14,000 USD per victim.

This indicates that dating scams have become one of the most financially detrimental forms of fraudulent activity, underscoring the urgent need for awareness and prevention within the crypto ecosystem.

Unmasking the Romance Scam Tactics

Erin Fracolli, Global Head of Intelligence and Investigations at Binance, highlighted some of the common scenarios observed in romance scams. Fracolli said, 

“Scammers often first connect with victims on dating apps or sites, where they build trust. Victims are lured into making investments with promises of high returns, only to later discover that it’s fake. Victims often initially invest small sums and can even make “withdrawals” or receive small amounts of their investment back, which makes the investment seem real. Eventually, however, they will be unable to recover larger deposits or “investments.” Scammers will also demand taxes, fees, or upgrades, in a last attempt to extract even more money. Victims often only realize they have been scammed at this point or after they do research on the fraudulent platforms.”

This scam is known as “pig butchering.” Scammers gain trust by demonstrating initial "profits" to encourage victims to invest more. Once they've exhausted all available funds from the victim, the scammers vanish, leaving their targets unable to recover their investments.

Here are real-life stories from individuals who fell victim to these heart-wrenching schemes. However, their names have been changed to protect their identity.

John's encounter with a scammer named Liddy on Tinder serves as a cautionary tale. Liddy portrayed herself as a young clothing store owner from Asia and the two moved their conversation to WhatsApp. During their conversation, she convinced John to invest in a high-return platform.

John took it safe by initially investing a small sum and following Liddy's guidance. However, he increased his investment after seeing modest profits and withdrew some of them. 

However, when John attempted to withdraw a larger sum, the app blocked the transaction and demanded a 30% tax payment within 72 hours, threatening to freeze the account. In the end, John paid the full amount, but the app's customer service went silent, and Liddy disappeared. Over two months, John lost the equivalent of more than $100,000.

John’s story is similar to Michael, another victim. Michael met a woman named Rose on social media, who claimed to be a cryptocurrency trader. Rose showed a keen interest in Michael, and their relationship grew through online communication and phone calls. To prove her authenticity, she shared a scan of a fake driver's license. As time passed, Michael became more comfortable and entrusted her with his money for investments. 

Tigran Gambaryan further explained that,

"With time, the victim, enticed by the promise of high returns, ended up sending crypto equal to over $500,000. It was only later that he realized it was a scam. By then, he had not only lost his savings but also his home, as he believed they were purchasing a house together. We collaborated with law enforcement to identify the scammer and helped recover $200,000 for the victim, although such outcomes are quite rare.”

In some cases, scammers employ a different approach by requesting money from their victims to assist them in fabricated, dire situations. 

Erin Fracolli added that,

“As with many scams, victims don’t meet their supposed love interests face-to-face, and their interactions are solely conducted online or over the phone. While some scammers will even conduct video calls with victims, these video calls are often short and poor quality.”

Another victim, a woman, met an individual named George through Facebook Dating. They instantly connected and they started talking about building a life together. However, George's narrative took a distressing turn as he revealed that his bank account had been frozen amid an ongoing investigation, rendering him financially helpless and unable to support his two children. Stranded in Cyprus, longing for a return to the UK, George leaned on the woman for financial support. 

Guided by compassion and trust, she extended a substantial sum, surpassing 20,000 USD, swayed by George's sincere commitment to repay the debt upon his UK return. Sadly, as skepticism set in and the victim halted the flow of funds, George vanished into thin air, leaving his repayment pledge unfulfilled.

Binance's Commitment to User Safety

Binance, the world’s leading cryptocurrency exchange by trading volume, remains dedicated to ensuring a secure cryptocurrency environment through active collaboration with law enforcement agencies globally. 

The crypto exchange’s specialized teams, consisting of over 70 members, efficiently processed more than 58,000 requests in 2023 from over 13,000 registered law enforcement officials worldwide. 

Binance recently supported the US Federal Bureau of Investigation (FBI) and Department of Justice (DOJ) in a significant pig butchering case where over $112 million in funds were seized. These partnerships resulted in the apprehension of multiple illicit groups and scammers.

Furthermore, the Binance team carries out regular training sessions for law enforcement personnel, providing insights into blockchain fundamentals and the legal aspects of cryptocurrency. 

Last year, Binance’s Law Enforcement Training Team, supported by the Investigations Team, organized 120 training sessions, both onsite and online. These initiatives bolster the safety of Binance’s platform for users and their investments in the ever-evolving crypto landscape.

The Binance Risk team also employs various tools and measures, including real-time risk monitoring, to ensure that our users don’t fall victim to scammers. Binance believes that proper education is key to enabling users to defend themselves against scammers. This is why the crypto exchange continues to roll out educational events, such as the dedicated Know Your Scam series, to help users stay on top of the latest schemes and tactics that scammers employ, as well as tips for avoiding them.

Signs of Romance Scams and How to Avoid Them

This last section is an important one as it would help you see the warning signs of romance scams and how to avoid them. Here are some important tips: 

• Don’t Move Away from the Dating App:  If you use a dating app, keep your communication within the platform's messaging service. Romance scammers usually prefer to to private communication channels like text, social media, or phone calls to build trust and evade detection on the dating site.

• Avoid Profiles that Seem to Good to be True: Usually, scammers don’t use their real identity on dating sites. They use stolen or manipulated photos of attractive individuals. To be safe, carry out in-depth research and validate the legitimacy of the individual associated with the profile before associating with them. 

• Don’t Rush: Take it slow when building a relationship with someone online.  Ask questions and watch out for inconsistencies in the other person's story that might reveal them as an impostor.

• Pay Attention to their Attitudes: When someone repeatedly cancels in-person meetings with various excuses, especially after several months, be careful how you relate with such a person. This is obviously a huge red flag. 

• Don’t Send Financial Aid: If you just met someone online and you have never met in person, turn down any request for financial aid. Also, don’t engage with them when they promise lucrative returns for investments. 

• Be Skeptical of Unrealistic Promises: High returns with low risk are often deceptive; if it appears too good to be true, it probably is.

• Don’t Give Out Your Personal Information: Finally, never share sensitive personal or financial information, such as passwords or private keys, with anyone, even if they claim to represent a trusted entity (police, investigation team etc). Use a password manager and always abide by good cybersecurity practices to secure yourself and your assets. 

In your quest for love online, remember to stay safe and keep in mind that not everyone you meet online has genuine intentions. Stick with good cybersecurity practices to protect yourself and your finances from scammers.