Digital fraud such as romance scams generate millions of dollars for criminals, and they all start with a whiff of social engineering. The purpose is to trick a victim into doing something unfavorable, such as making a poor investment. Today, a new variation of these schemes, known as pig butchering, is unfortunately on the rise.
According to South China Morning Post (SCMP), pig butchering scams originated in China, where they came to be known by the Chinese phrase Sha Zhu Pan. This is an approach, in which criminals essentially “fatten” victims up and then take everything they have. These frauds are typically cryptocurrency schemes, but they can also involve other types of financial frauds. (Zuo 2021.)
The pig butchering scam works in principle as follows: villains cold-contact people through SMS or on social media platforms. They will often simply say “Hi” or “Hey, it was fun catching up last week!”. After this, the criminal seizes the opportunity for conversation, even if the recipient responds e.g. by indicating, that the criminal has contacted the wrong person. The offender is very skilled in manipulating the victim. The villain leads the victim towards the feeling that this is a friendship. After the lawbreaker has established the false friendship, the villain will introduce the idea that they have been making a lot of money in investments, and the offender will suggest that the victim should also consider getting involved while there is still time. (Pro Publica 2022.)
Later the criminal gets the victim set up with a malicious application or web platform that appears trustworthy. It may even imitate the platforms of legitimate financial institutions. Once inside the false portal, victims can often see carefully chosen and thoughtfully organized real-time market data that is meant to show the potential of the investment. Once the victim funds the prepared investment account, the victim can see the balance grow. (Podkul 2022.)
Crafting malicious financial platforms to look legitimate and refined is a trademark of pig butchering scams, as are other touches that add truth-likeness, such as allowing the victim to withdraw a little bit of money from the platform. This is a tactic that criminals also use in traditional Ponzi schemes, which generate returns for earlier investors with money taken from later investors (Investor 2023).
Even though this swindle has some new twists compared to older ones, one can still see where it is heading. Once the victim has deposited enough money, the criminals shut down the account and disappear.
Carrying off pig butchering frauds takes a lot of communication and relationship building with victims over time, and the whole thing has gotten even worse. Researchers say that crime syndicates in China have developed scripts and playbooks that allow them to offload the work at scale onto inexperienced offenders or even forced laborers who are victims of human trafficking (McCready 2022).
The Chinese government cracked down on these scams beginning in 2021 (Reuters 2021), but criminals have been able to move their pig butchering operations to Southeast Asian countries such as Cambodia, Indonesia, Laos, and Malaysia. Governments around the world have increasingly been warning about the threat (FBI Portland 2022; FBI 2022). In 2021, the Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center received more than 4,300 submissions related to pig butchering scams (FBI 2021), and at the end of November, the US Department of Justice (2022) announced that it had seized seven domain names used in pig butchering scams in 2022.
Public education is a key component in helping people to avoid becoming victims of a pig butchering scheme. If people can spot the signs and understand the concepts that underly the fraud, they are less likely to be misled. As with romance scams and other highly personal and exploitative attacks, pig butchering scams take a colossal psychological toll on victims in addition to the financial loss they suffer, and the use of forced labor adds yet another layer of suffering to pig butchering scams.
Department of Justice. 2022. Court Authorizes the Seizure of Domains Used in Furtherance of a Cryptocurrency “Pig Butchering” Scheme. Available at: https://www.justice.gov/usao-edva/pr/court-authorizes-seizure-domains-used-furtherance-cryptocurrency-pig-butchering-scheme. Accessed 13 January 2023.
FBI. 2021. Internet Crime Report 2021. Available at: https://www.ic3.gov/Media/PDF/AnnualReport/2021_IC3Report.pdf. Accessed 13 January 2023.
FBI. 2022. Cryptocurrency Investment Schemes. Available at: https://www.ic3.gov/Media/Y2022/PSA221003. Accessed 13 January 2023.
FBI Portland. 2022. FBI Oregon Tech Tuesday: Building a Digital Defense Against a New Cryptocurrency Scam: Pig Butchering. Available at: https://www.fbi.gov/contact-us/field-offices/portland/news/press-releases/fbi-oregon-tech-tuesday-building-a-digital-defense-against-a-new-cryptocurrency-scam-pig-butchering. Accessed 13 January 2023.
Investor. 2023. Ponzi Scheme. Available at: https://www.investor.gov/protect-your-investments/fraud/types-fraud/ponzi-scheme. Accessed 13 January 2023.
McCready, A. 2022. From Industrial-Scale Scam Centers, Trafficking Victims Are Being Forced to Steal Billions. Vice World News. Available at: https://www.vice.com/en/article/n7zb5d/pig-butchering-scam-cambodia-trafficking. Accessed 12 January 2023.
Podkul, C. 2022. What’s a Pig Butchering Scam? Here’s How to Avoid Falling Victim to One. Pro Publica. Available at: https://www.propublica.org/article/whats-a-pig-butchering-scam-heres-how-to-avoid-falling-victim-to-one. Accessed 13 January 2023.
Reuters. 2021. China arrests over 1,100 suspects in crackdown on crypto-related money laundering. Available at: https://www.reuters.com/world/china/china-arrests-over-1100-suspects-crackdown-crypto-related-money-laundering-2021-06-10/. Accessed 12 January 2023.
Zuo, M. 2021. Online ‘pig butchering’ love scams have gone global after getting their start in China. SCMP. Available at: https://www.scmp.com/news/people-culture/social-welfare/article/3150688/online-pig-butchering-love-scams-have-gone. Accessed 12 January 2023.