But first, let's talk about social engineering, and the psychology that makes these types of fraud possible.
What is social engineering?
In the context of fraud, social engineering is the art of manipulating people into giving up confidential information or performing actions against their own interests.
Fraudsters use social engineering to gain unauthorized access to accounts, financial assets, and computer systems by exploiting human psychology and manipulating victims into providing access or information they wouldn't normally divulge.
The most common social engineering tactics used by scammers include:
Phishing: 90% of data breaches are the result of phishing attacks! Fraudsters send emails or messages that appear to be from legitimate sources, like banks or government agencies, asking recipients to provide personal or financial information. These messages often contain urgent or alarming language to prompt quick action.
Pretexting: A scammer might pose as a service provider and request information under the guise of needing assistance or verification. They fabricate a scenario to gain a victim's trust and extract information. This can take the form of an unsolicited "response" to a question that was never asked, often via text message or phone call.
Baiting: Fraudsters offer something enticing, like free software or movie downloads, to lure victims into clicking malicious links or downloading malware-infected files.
Impersonation: Scammers impersonate authority figures, like bank employees or law enforcement officers, to manipulate victims into complying with their demands, such as installing software, revealing passwords, or giving up multi-factor authentication (MFA) codes. They create urgency to prevent victims from thinking critically or verifying their claims.
What is a pig butchering scam?
In a pig butchering scam, fraudsters manipulate victims into investing as much of their money as possible before revealing the investment is a fraud.
According to recent estimates, pig butchering scammers have likely stolen more than $75 billion from victims around the world using this type of fraud. Pig butchering schemes have exploded in popularity since the pandemic, and authorities have tracked the flow of funds to organized crime groups who use victims of human trafficking to commit the scams.
How does the scam work?
The target gets a text from a number they don't recognize. The scammer then initiates a conversation ("Hello, is this Dave?"). When the target replies that it's a wrong number, the scammer strikes up a conversation, eager to keep the target engaged. These are often the opening maneuvers of a pig butchering scam, one of the most devastating financial frauds around.
A typical pig butchering scam follows this pattern:
Once the fraudster finds a suitable target — the proverbial "pig" — and establishes a conversation, they stay in constant contact to build a relationship. With the victim's trust now earned, the fraudster encourages the victim to start investing, often on cryptocurrency trading platforms. They claim to have insider tips or family connections in the investment industry and explain that massive returns are common. They encourage the victim to download an app or to use a fraudulent investment platform that looks legitimate. They may also offer to trade together so they can show how easy it is to yield returns.
Once the victim joins the platform, the fraudster simulates trades to make it look like they're earning profits. The fraudster continues to manipulate the victim into making larger and larger investments, thereby "fattening the pig."
Six stages of a typical pig butchering scam
- Unknown caller: The victim receives a "wrong number" text message.
- Pressure tactics: The scammer starts to talk trading, pitching cryptocurrency as an easy investment opportunity. If the victim changes the subject, they keep looping back to investment schemes, usually involving crypto.
- Fear of missing out: Emotional manipulation is a cornerstone of pig butchering scams. Fraudsters try to make the victim feel like they're missing a once–in-a-lifetime chance to profit.
- Exclusive opportunity: The scammer suggests a "special" crypto service on an investment platform they control. This may give them access to the victim's crypto wallet, or even allow them to show false returns.
- Small gains: The scammer starts trading with the victim, allowing small withdrawals early in the scam. To back up their promise of guaranteed returns, the scammer allows the victim to withdraw money from the investment platform. This is one of the final hurdles the scammer needs to clear to get the victim to invest as much as possible.
- Too good to be true: The victim starts making small trades for small profits. Once they take the bait, they're encouraged to invest more, but ultimately, they won't be able to access their funds!
How to protect yourself
Social engineering scams, including pig butchering, work by exploiting psychology, curiosity, inclination to trust, and desire to help others. Here are some best practices to avoid falling victim to these types of scams:
- Slow down. Fraudsters want you to act before you have time to think.
- Never answer random calls or texts from numbers you don't recognize.
- Research the facts. Always check the URL to ensure you're using the correct link. Use a search engine to verify the contact details to be sure you're dealing with a real company.
- Be cautious around new acquaintances, whether you're starting a friendship or romantic relationship, especially if they start talking about crypto investing.
- Never share personal information (e.g., your SIN, address, bank account details) with strangers online.
- Don't sign up for crypto investment platforms unless you're 100% certain they're legitimate and have verified it with third party sources. Generally, anyone selling securities or offering investment advice must be registered with their provincial securities regulator. Check if the company is registered with a provincial securities regulator or the Canadian Securities Administrators.
- Avoid investing in cryptocurrency unless you're confident you know exactly what you're doing.
- Never share your username, password or one-time security codes with anyone. Block the number and delete any requests for financial information or passwords.
Learn more:
Denver man loses $1.6 million in pig butchering scam!
Finance worker pays out $25 million after video call with deepfake CFO
Browse scams A-Z (antifraudcentre-centreantifraude.ca)