Online scams: First they gain your trust, then they take your money

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It could start with an unexpected text.

Or a direct message on a social media channel.

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You respond and a relationship develops with the stranger. You talk about common interests or perhaps family.

This can last weeks or months.

The other person then mentions an investment opportunity and sends you information about it, often a link to a website. They will show you how much money they are making.

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Visit the investment website and it looks legit.

You invest a few hundred dollars to test the waters and you get a great return on investment. So, you invest more money, often using cryptocurrencies.

That’s when the door closes.

The investment and your new friend disappear.

Sammy Wu, director of investigations at the British Columbia Securities Commission, puts it bluntly: First they gain your trust, then they take your money.

The method has become known as “pig slaughter” because it is similar to fattening a pig before slaughter, says the BC Securities Commission, the province’s financial markets regulator, which issued a warning this week about the growing threat of sophisticated online scams.

Wu said one investor invested $1 million in one of these scams.

“When they disappear and you ask for more communication, there is radio silence,” Wu says.

The increasing use of online communication and social media, and an increase in loneliness and isolation, which was exacerbated during COVID-19 and after, have precipitated a rapid rise in online scams, Wu says.

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Losses for victims are skyrocketing.

Figures released by the commission show British Columbians reported losses of $46.4 million due to online investment scams in 2023. That’s up from reported losses of $24 million in 2022 and 8, 5 million dollars in 2021.

It is believed that the losses will be much greater. The Canadian Anti-Fraud Center estimates that only five to 10 per cent of online fraud is reported. That means there are likely hundreds of millions in losses in British Columbia, a figure commission officials agree is probably the right order of magnitude.

In an effort to warn British Columbians about the growing threat of these sophisticated online scams, the BC Securities Commission has teamed up with the Canadian Anti-Fraud Centre, the BC RCMP Financial Integrity Program, the BC Burnaby, the Vancouver Police Department and the US Secret Service.

The groups direct people to their educational sites about investment scams, including for the BC Securities Commissionhe Canadian Anti-Fraud Center and the US Secret Service

They warn people to be aware of all online scam methods, including romance scams and the use of dating websites.

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They warn that sometimes after someone has lost money, the new friend or someone else will offer to help recover the money as long as the victim pays additional money, supposedly for taxes or other fees.

That money also disappears.

Agencies say to protect yourself, be wary of any unsolicited messages on social media, don’t invest solely on the advice of someone you met online, and stay away from promises of big, quick profits.

Doug Muir, director of enforcement at the British Columbia Securities Commission, says public awareness is very important because it is almost impossible to investigate, prosecute and recover money. This is because scammers are located outside of Canada, primarily in Southeast Asia and Africa. Scams are often perpetrated by organized criminal groups and some of the people involved could be victims of human trafficking.

Agencies like the commission try to thwart scams through public warnings in their online investment precautions list, many of them related to cryptographic schemes. They have also had some success in getting ISPs to remove scammer websites in North America, but not in other parts of the world.

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“But once one (website) is removed, more can come back. So how they adapt these schemes is a fast moving target,” says Muir.

If you have been a victim of such a crime, report it to the BC Securities Commission or local police, it says.

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