MADISON, Wis. – Scammers convince consumers to invest their money in fraudulent schemes by using many different tricks – even romance. Ahead of Sweetest Day on October 18, consumers can protect themselves from heartbreak and devastating financial loss by learning how these scams work and how to identify them.
In 2024, investment-related fraud made up less than 5% of fraud reports to the Federal Trade Commission (FTC). However, that small percentage resulted in over $5.6 billion in financial losses and accounted for over 45% of all fraud losses reported to the FTC last year. While the median amount lost by consumers was $497 across all fraud categories, investment related fraud had a median loss of $9,196.
In recent years, a form of investment fraud known as “pig butchering” has become more common. In this scam, the scammer targets a consumer by pretending to be an online romantic interest or investment coach. The scammer builds a relationship with their target through a dating app, text messages, or social media platform.
Next, the scammer asks their target to invest with them in a promising new trading platform or by buying an exciting new cryptocurrency. They guarantee big returns. What the consumer does not know is that the proposed investment is secretly controlled by the scammer. The consumer is provided fake growth charts and account statements from the fake trading platform; then they are encouraged to invest more money into the scheme. This is called “fattening the pig.” When the consumer runs out of money or realizes it is a scam, the scammer “butchers the pig” by disappearing with all the invested funds.
The best way for consumers to handle a pig butchering scam is to recognize the red flags and avoid it entirely by never giving money to anyone they meet online. Some warning signs consumers can take notice of include:
- No trustworthy romantic interest or investment coach will pressure someone to quickly invest a large amount of money into a little-known trading platform or cryptocurrency.
- Many pig butchering scams start with a “wrong number” text message. If a consumer receives a text meant for someone else, they should ignore it.
- “Love bombing” – when a romance quickly showers their partner with affection to manipulate them. Scammers use this technique to gain trust and pitch investing together.
- Social media profiles run by scammers usually do not have a long history of posts or photos. If a profile seems very new, it could belong to a scammer.
- If an online romance attempts to isolate someone from their friends and family, they might be a scammer who wants to be the only person their target trusts.
If a consumer realizes they or someone they know has been scammed, they should take the following steps:
- Stop all contact with the scammer.
- Save all communications with the scammer, including bank and cryptocurrency account transaction records.
- Collect any identifying information they have about the scammer, including their name, phone number, email and mailing addresses, and social media account handles.
- Report the scam to their financial institutions, credit card companies, and local law enforcement right away.
Victims of pig butchering and cryptocurrency investment scams should report the scam to local law enforcement and ask for a case number. Victims should also file a complaint with the Wisconsin Department of Financial Institutions (DFI), the Federal Bureau of Investigation’s Internet Crime Complaint Center, and the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP).
For more information on financial investment scams, including pig butchering and cryptocurrency scams, review the DFI’s Investment Scam Tracker. The tracker includes descriptions of fraudulent or deceptive scams based on consumer complaints reported to the DFI. The investment scam tracker is searchable by company name, scam type, or keyword, and it includes a list of frequently asked questions, a glossary of common investment scam related terms, and links to additional investor resources. Consumers with questions are encouraged to contact the DFI’s Division of Securities at (608) 266-2139 or DFIDLSecuritiesEnforcement@dfi.wisconsin.gov.
For more information and consumer protection resources or to file a complaint, visit DATCP’s Consumer Protection webpage at ConsumerProtection.wi.gov or contact the Consumer Protection Hotline at (800) 422-7128 or DATCPHotline@wisconsin.gov.
