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What Is a Pig Butchering Scam?

Pig butchering scams get their colorful (and gory) name from the process of fattening hogs before slaughtering them. Except in this case, it’s a scammer making friends with you before taking your money. These cons have four distinct phases:

1. Initial contact is made by a scammer. The scammers are often enslaved by organized crime rings who force them to contact potential victims through social media platforms, dating apps, online networking sites, and job boards.
2. Fattening, a phase where the scammer gets to know and builds trust with a victim. They may pretend to be romantically interested in the victim, befriend the victim, or offer the victim a job.
3. Slaughter refers to the phase where the con pays off. Scammers may persuade victims to send them money, invest in a fake company or cryptocurrency, or reveal sensitive personal information that can be used for identity theft. Over time, scammers ask for large sums of money threatening to end contact if victims refuse to pay.
4. Shaming and disappearance. Scammers will continue their relationship with the victim until the victim is unable to pay or catches onto the scam. Scammers may taunt their victims to shame them into silence, or they may simply vanish along with any accounts, websites, or apps they’ve been using.

How to Avoid Pig Butchering Scams:

To avoid becoming a victim of a pig butchering type scam, watch for these red flags and know how to protect yourself:

• Unexpected contact: Never respond to unsolicited messages from unknown contacts, even about seemingly benign topics, especially via text message and on encrypted messaging applications.
• Refusal to participate in video chats: If someone you’ve been messaging with consistently declines to interact face-to-face, they likely aren’t the person from the profile photo.
• Request for financial information: Don’t share any personal financial information with individuals you’ve never met in person. If a new virtual friend or romantic connection starts making financial inquiries, put the brakes on the relationship.
• Invitation to invest in specific financial products: Be wary of any unsolicited investment advice or tips, particularly from someone you’ve only spoken to online and even if they suggest you trade through your own account. Always question what a source has to gain from sharing tips with you and whether the transaction fits with your financial goals and investment strategy.
• Unknown or confusing investment opportunity: Carefully evaluate the product, as well as the person and/or company requesting your investment. Along with a basic search, try adding words like “scam” or “fraud” to see what results come up. Consider running recommendations by a third party or an investment professional who has no stake in the investment, and use FINRA BrokerCheck to see if the promoter is a registered investment professional.
• Unfamiliar trading platforms: Do extensive research before moving any money, particularly in an emerging market like cryptocurrency, which has hundreds of exchanges and new avenues for trading continuing to evolve. Who controls the platform? What security measures are in place? How can you withdraw funds if needed? If you don’t know the answers to those questions, don’t put your assets there.
• Exaggerated claims and elevated emotions: Take a closer look at any investment that offers much higher than average returns or is touted as “guaranteed.” Fraudsters will also often use their knowledge about you to appeal to your emotions—something like, “Don’t you want to have money to send your kids to college?”
• Sense of urgency about an upcoming news announcement or share price increase: Remember that insider trading is illegal, and you should never trade in shares of a company on the basis of material, nonpublic information.

MORE:

Learn more about how to protect your money from fraud and get more insight from the FBI and the Financial Crimes Enforcement Network (FinCEN) on pig butchering schemes involving cryptocurrency.

If you think you’ve been a victim of a pig butchering stock scam, submit a regulatory tip to FINRA. If you think you’ve been the victim of internet fraud, file a report with the FBI’s Internet Crime Complaint Center.

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Filed under: "Ask-an-Advisor", Accounting, Ethics, Experts Invited, Funding Basics, Glossary Terms, LifeStyle, Professional Liability | Tagged: Broker Check, FBi, FinCEN, FINRA, fraud, internet crime, phishing, pig butchering scam, pig butchering scams, scam, scams, SEC, security, video chats |