Amid concerns around the explosion of multiple international scams that have occurred in the past year, Nikhil Kamath, Founder and CEO of the online brokerage firm Zerodha, expressed his concern about the number of people falling prey to pig butchering scams. Also referred to as the Romance scam, this form of investment fraud preys on individuals’ emotional susceptibility.
Taking to Twitter (Now ‘X’) on February 17, Kamath said, “After the Chinese loan apps scam, the latest scam from actors in China and other Asian countries is phishing websites. Fraudsters are creating hundreds of websites and trading apps that look similar to the websites of Indian brokers.”
“Unwitting users who click on the app download links, etc., will be prompted to download the fake app. The goal is to get people to transfer money by taking advantage of their familiarity with these apps.” He added.
What is Pig Butchering scam?
Pig butchering scams are also known as romance scams or Sha zhu pan. The term “pig butchering” refers to the process of fattening the victim emotionally before ultimately deceiving them financially. While these scams have been around for years, their prevalence has surged, particularly during the Covid-19 pandemic.
Through dating apps, social media platforms, or other online avenues, perpetrators meticulously craft false identities and personas to establish trust and rapport with their victims. These relationships, often cultivated over weeks or even months, serve as the foundation for the subsequent exploitation.
They manipulate victims into believing they have found genuine companionship through charming conversation and flattery. Over time, the fraudsters introduce investment opportunities that promise high returns with minimal risk.
Once the victim is sufficiently invested emotionally, the scammers capitalise on their trust to persuade them to invest in fraudulent schemes, often involving cryptocurrencies or other speculative assets. Victims are coerced into transferring funds under the guise of supporting their newfound love interest’s business ventures or financial endeavours.
According to a Bloomberg report, after extracting as much digital currency as possible from their victims, the criminals abscond with the funds, occasionally depriving innocent individuals of their entire life savings.
The latest iteration of these schemes is being peddled as ‘ready-to-go kits’ on the dark web, making it easier for aspiring scammers worldwide to get involved. These kits include the necessary applications that are required for these scams, like WhatsApp, Dating Apps, Generative AI, VPN, and Web Hosting platforms.
Nithin Kamath, in a post on ‘X’ in November last year, shed light on the scale of pig butchering scams in India, emphasizing their staggering scope and the vulnerability of countless individuals to fake job offers, fraudulent investment schemes, and cryptocurrency scams.
Highlighting the insidious nature of these scams, Kamath noted that the perpetrators themselves could be victims of other forms of fraud. Many are duped into accepting job offers abroad, only to find themselves coerced into scamming Indians by establishing trust through social media platforms, often using fake profiles.
How does the scam work?
1. The scammer starts by spending a lot of time conversing with the victim to build trust and rapport. They most commonly use fake profiles of the opposite sex to build a better connection.
2. Once the trust is built, they propose investment opportunities that usually guarantee substantial returns with minimal risk.
3. They further prove to the victim through small returns to show credibility and then encourage them to invest more.
4. After the victim has invested a significant amount, the scammers disappear with all the money, often leaving the victim in a devastated state without any savings.
Recently, the most popular form of such scams has been performed using the group chat strategy. By populating chat groups with multiple individuals discussing investments, scammers can swiftly assess the interest level of their targets. Those who remain in the group are presumed to be interested in investing, making them ideal candidates for the scam.
The scammers operate as a collective with various roles and objectives. Some group chat members are fake profiles created by scammers to add authenticity to the group. This tactic streamlines the scamming process, allowing scammers to concentrate their efforts on individuals who are more likely to fall prey to their deceitful schemes. Additionally, it fosters a sense of community and social validation, as prospective victims observe others engaging in investment discussions without raising concerns about potential scams.
How can we prevent ourselves from becoming prey to such scams?
Offering tips to protect against pig butchering scams, Kamath advised:
1. Refrain from responding to unknown messages on WhatsApp, social media, and dating apps.
2. Exercise caution when prompted to download new apps or open links.
3. Be wary of emotional manipulation and avoid making impulsive decisions.
4. Stay calm and avoid reacting hastily to enticing offers.
5. Seek assistance from law enforcement or legal professionals if uncertain.
6. Be cautious of promises regarding jobs or high returns, and never share sensitive personal or financial information.
7. Remember, if an offer sounds too good to be true, it likely is.
