Valentine's nightmare? Romance scams remain a $1B honeypot for criminals

Those in search of love online are increasingly falling prey to romance scams, with $1.3 billion stolen in 2022 alone.

Valentine’s Day is all about romance, but the annual event is a reminder that those looking for love are potential victims of scams. 

Online dating is big business, with the industry expected to generate $3.1B in 2024. Statista also estimates there will be some 440 million online dating users by 2027.

A report from Binance’s security and compliance department shared with Cointelegraph on Feb. 14 outlined the increasing prevalence of romance scams that have been noted by security and analytics firms in recent months.

Citing data from Norton’s 2023 Cyber Safety Insights report, 1 in every 4 adults surveyed globally reported falling prey to an online dating or romance scam.

Related: Tether freezes $225M in USDT linked to romance scammers amid DOJ investigation

The United States Federal Trade Commission had 11,235 dating and romance scam complaints in 2016. This number has ballooned since, with around 70,000 reports in 2022 accounting for $1.3 billion in loses for unsuspecting love seekers.

While a recent report from the U.S. Treasury Department suggests that cash is still king in global money laundering, cryptocurrency payments account for 34% of reported losses in the romance scam arena

Binance cites internal data from 2023 that provides an estimate that romance scams made up 2% of total report cases. It notes that the conservative estimate still means that the average loss per victim is $14,000.

Exploiting trust

Tigran Gambaryan, Binance’s head of financial crime compliance, reflects on his experience as a former U.S. IRS investigator to draw comparisons between romance scammers and financial fraudsters.

“Reflecting on my experiences as a Special Agent, These manipulations are not unlike the schemes I’ve seen where fraudsters sell lies to get their hands on your money. The essence of their approach remains the same: exploit trust and fabricate connections to achieve their deceitful ends,” Gambaryan explains.

Related: 27,000 requests last year: Collaboration key for Binance’s Investigations team

Binance’s global head of intelligence and investigations gives a handful of anecdotal cases that its team has been involved in dealing with. One user wound up losing $100,000 to a scammer who used Tinder to make initial contact before slowly drawing money out of the victim.

Perhaps more telling is another individual who met a cryptocurrency trader on a social media platform. Over a few months, the scammer built trust through direct messages and phone calls. The victim would eventually send cryptocurrencies worth $500,000 to the scammer before communication was severed.

In this instance, Binance assisted law enforcement agencies and managed to recover $200,000 of the victim’s funds.

Pig-butchering remains a trend

Pig-butchering has been identified by a number of different security firms and law enforcement as a rising trend online.

Sophos released its own research on the subject in Jan. 2024 which suggests that pig-butchering is becoming one of the fastest-growing segments of online fraud, with U.S. victims losing billions of dollars to fraudulent cryptocurrency-related investment schemes.

Scammers are also increasingly using DeFi decentralized applications and protocols as a means of fleecing victims once they build up trust.

The platforms purportedly allow scammers to bypass prior hurdles, like needing victims to transfer funds. Victims require only connect a Web3 wallet to a malicious contract to potentially lose funds.

Magazine: Blockchain detectives: Mt. Gox collapse saw birth of Chainalysis