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Fraud: The New Language of Love

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For most people, falling in love is the most exciting feeling in the world. But love also asks a lot of us, requiring us to prioritize the needs of others over our own—a task that requires commitment, courage, and, at times, the most difficult of all: vulnerability.

But what if someone took advantage of that vulnerability? What if they used your most private affairs to their advantage? And what if you were more than willing to go along with it, to open your heart—and wallet—at the first sign of genuine connection, attention, and companionship?

Last year, there were 56,000 new reports of romance scams. And the crime wave has already cost victims and financial institutions billions of dollars. In fact, romance fraud costs were $547 million in 2021 alone.

So, what can we learn from the thousands of victims who’ve already fallen prey to these scammers, and why should we care?

 

One Expensive Fling

The consequences of romance fraud can be devastating: victims may lose friends and family as a result of their decision to send money to a stranger they've never met. They may also experience humiliation, shock, anger, anxiety, stress, fear, and depression.

The financial sector has also been hit hard. Victims of romance fraud lost $1.3 billion between 2016 and 2021, more than any other FTC fraud category. This type of loss can have a significant financial impact, as banks are left footing the bill after the scammers vanish from dating apps and into cyberspace. Lloyds TSB Bank, for example, refunded 97 percent of all bank fraud cases under its Fraud Refund Guarantee.

With that sort of liability, it’s no wonder banks, lenders, and fintechs are investing in fraud monitoring and prevention services such as OMNIO to keep tabs on abnormal or suspicious customer behavior.

 

True Love or Fraud?

Yes, romance scammers have the ability to trick banks and individuals. But why should the rest of the world care? Aren't fintech companies built to handle that kind of risk?

Both yes and no.

While having a strong risk management strategy can help financial institutions better mitigate these unnecessary losses and thus protect their customers, the ethical issue is not so much where the money goes as it is where it ends up.

Who would have guessed that a brief Tinder interaction would unknowingly lead to so many people unknowingly helping to launder money to fund human trafficking, the illegal drug trade, and even terrorism? Banks have anti-money laundering (AML) monitoring systems in place, but there is still room for improvement. In fact, financial institutions that failed to follow compliance and due diligence were fined $2.7 billion in 2021.

So, really, everyone should be concerned about romance fraud. And it's something that should make financial institutions think twice about their overall risk management strategy.

 

The 5 most common rom-cons

Romance fraud can take many forms. But the story always follows the same core tenets: online messaging, no face-to-face communication, scammers demanding absurd sums of money with "urgent" deadlines, and the entire affair ends with no resemblance to the entire premise it was all built on: love.

Scam #1: Crypto Investing Opportunities

Assume you're on a dating app, chatting with a new romantic interest. You talk about your interests, dislikes, and goals, and then the other person asks if you could switch the conversation to an encrypted chat app like WhatsApp or Telegram. Okay, fine. You shift the flirting to a new forum. Let's see how things progress from here.Perhaps this is their preferred method of communication.

It's not a big deal.

Then, as you try to continue the conversation by mentioning your favorite travel destinations, the person begins to offer financial advice. "I have a business opportunity for you." You might think this is strange. But you're a trooper. So you continue to converse. Conversations like this happen all the time online, and the real-world consequences are roughly as expected: Victims of cryptocurrency romance scams lost $139 million in 2021 alone.

‍Scam #2: Money Mules

Money laundering, according to movies, is complicated. So you'd have to be a seasoned criminal to even take part in it, right?

Wrong.

Romance fraud victims are frequently used as "money mules," becoming entangled in a complex web spun with a combination of cupid's arrows and wire transfers. A typical scenario goes something like this:. The scammer explains that they need to move a large sum of money quickly for an unknown reason. Or maybe their boss only pays them in postal money orders that they are unable to cash. The scammer will ask you to cash forged money orders and then wire the money back to them. They say they'll send you more money than you need, then you withdraw the rest and give it to someone else.

Scam #3: "I need money now!"

When you're in love, there's nothing you wouldn't do for your partner. As a result, it's no surprise that victims of romance fraud frequently fall victim to "urgent" money requests. The scammer will claim that there is an emergency in their family and that they must return home. They swear they'll pay you back later. Perhaps they need to pay for a passport because they've become stranded in a foreign country.

Or...

The laundry list of reasons why someone would ask for money is far too long for any of us to read. However, scammers appear to have no shortage of ideas for socially engineering their victims into paying exorbitant sums of money in a ridiculously short period of time.

 

What You Can Do for Your Customers

Now that you understand how romance scammers operate and the devastating impact they can have on both individuals and financial institutions, it's critical to consider what you and your organization can do to prevent people from becoming another drop in the bucket of billions lost to romance schemes.

  • Use systems for suspicious activity monitoring for fraud detection, anti-money laundering (AML), and more to protect your customers.
  • The face of fraud is changing quickly. Use a platform that can adjust just as quickly.
  • Look at more than transactions. Monitor various data points such as behaviors, including account switching, movements, and trends over time.
  • Implement identity verification but continue monitoring changes in details around identity and transaction.

 

Contact us to learn more about how OMNIO can assist your company in protecting its customers.

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