CFTC Says Beware of Romance Scams

With Valentine’s Day upon us, the Commodity Futures Trading Commission (CFTC) last week (February 8) issued an Advisory Alert warning for those seeking romance to tread carefully on dating apps and social media.  Especially when it comes to strangers asking for financial support or giving investment advice.

The CFTC urged particular caution with promotions for cryptocurrency investments because of the growing risk an international criminal organization may be fronting it.  According to the agency, these scams can dupe even the most savvy among us through the practice of “grooming” or what is also referred to as “pig butchering.”  This is when fraudsters develop relationships with their victims through weeks of digital socializing before going in for the financial kill.

The CFTC has good reason to send out the alarm.  Last year alone, financial romance and grooming gangs stole more than $3.5 billion.  And there is every reason to believe they will continue unabated.  So here are the top Warning Signs the CFTC is promoting to make sure you do not become the next victim when approached by a new online friend:

• They quickly want to move to a private messaging app.
• They communicate frequently but can never meet in person.
• They claim to be wealthy due to crypto or foreign currency trading successes.
• They claim to have inside information from an uncle or other insider.
• They encourage you to open an account using a crypto-only trading website.
• They advise you to invest in crypto and send the funds to their wallet or a particular trading platform.
• You follow their directions and meet with very quick success.

It is this last warning sign that may be the most difficult to resist.  But under these schemes, success does not beget success.  As the CFTC cautions, you may at first be encouraged to withdraw some of your profits and invest more.  But eventually, “you will be ‘locked out’ of your account and forced to pay more money (commonly in fake fees or ‘taxes’) or have your ID verified to get any of your money back.”  At the end of the day, “the scammer vanishes along with your money.”

Here is what the CFTC says you should do to protect yourself from these schemes:

• If it sounds too good to be true, stay away.
• Do not move your conversations off the dating/social media platform.
• Do not mix money with long-distance relationships.
• Screen capture the potential scammer’s picture and check (through reverse image searches) if the photo has been associated with any other scams.
• Try to verify their identity through online searches and check their registration status at https://www.cftc.gov/check.
• Check the trading website you are directed to and how long it has been registered at https://www.cftc.gov/Exit/index.htm?https://lookup.icann.org/en.
• Report the fraud to https://www.cftc.gov/complaint and to the relevant social media or dating platform.

In announcing the Alert, the Director of the CFTC’s Office of Customer Education and Outreach Melanie Devoe put the warning in the simplest of terms:

Financial grooming frauds can happen at any time, but Valentine’s Day is a perfect opportunity to remind people that dating and messaging apps and social media can be platforms for scams and fraudulent activity.  As the old saying goes, if it sounds too good to be true, it probably is.

The CFTC also made it a point of enlisting whistleblowers in its fight against romance fraud, highlighting that under the CFTC Whistleblower Program, successful whistleblowers can receive up to 30% of any government recovery.

Some very wise words of caution for those who may be seeking romance online.  And for those who may not but who may know of others up to no good in this arena, the CFTC has made it clear it wants to hear from you.  If you would like to learn more about what it means to be a CFTC whistleblower, please do not hesitate to contact us and we will connect you with an experienced member of our whistleblower team for a free and confidential consult.

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Tagged in: Cryptocurrency, Financial and Investment Fraud, Fraud in CFTC-Regulated Markets,