What is pig butchering fraud?

Fraud scams in South Africa continue to increase, with cybercrime alone accounting for an estimated R2.2 billion in losses in 2023. One scam that has gained significant traction in South Africa is commonly referred to as "pig butchering." This occurs when fraudsters spend an extended period of time working to build trust with their targets, often posing as romantic interests or business partners, before defrauding them of large sums of money.

In order to protect themselves and their customers, South African businesses need to understand scams like pig butchering and remain updated on emerging fraud tactics. Educating end-users about these threats is the first step in protecting both them and the business from the growing wave of fraud and safeguard their reputation in an increasingly challenging digital landscape.

What is pig butchering fraud?

Pig butchering is a sophisticated investment scam in which fraudsters lure victims by forming personal relationships with them and convincing them to invest in fraudulent schemes, often involving cryptocurrency. The term "pig butchering" refers to the process by which scammers "fatten up" their victims by building trust with them over weeks or even months before executing the scam. 

The process typically begins with innocent contact, usually through social media, dating apps or messaging platforms. The scammer pretends to form a friendship or romantic relationship with the victim. They then subtly introduce the victim to a "lucrative investment opportunity." As the victim starts investing, initial returns may appear genuine, encouraging larger deposits. However, once the scammer believes they’ve extracted the maximum amount of money, they cut off all contact, leaving the victim with nothing.

Often, pig butchering schemes are conducted from fraud farms. Fraud farms are groups of individuals who are coerced into committing fraud, often as victims of human trafficking. These workers - also victims themselves - are typically deceived with promises of legitimate job opportunities, only to find themselves trapped in exploitative conditions. Organised crime syndicates are often behind these operations, trafficking the victims, confiscating their travel documents and forcing them to carry out online scams.

Below is the typical journey a pig butchering scam would follow. 

1. Creating a fake persona
   ‍Scammers create fake online personas, meticulously designed to target the interests and weaknesses of potential victims. They use stolen or AI-generated photos with fabricated backstories to make their personas seem credible and trustworthy.

2. Initiating contact
   ‍Scammers reach out to potential victims through dating apps and social media - or even random calls and texts. They often rely on scripts and pre-written messages to initiate a conversation and gauge a victim’s receptiveness.

3. Building trust
   ‍Scammers spend weeks or months building a relationship with the victim, engaging in frequent friendly communication. They show interest in the victim’s life and share personal stories to create a false sense of intimacy. They don’t initially bring up money or investments.

4. Introducing investments
   ‍Once trust is established, the scammer steers the conversation toward investments, often involving crypto or FX. This is usually framed as an opportunity to build a future together or achieve financial freedom. They present themselves as experienced investors who want to help the victim get started and succeed, sharing fabricated success stories or inside knowledge of investment opportunities. 

5. Prompting deposits
   ‍The scammer convinces the victim to download a supposed investment app or visit a fraudulent investment platform. They walk the victim through the process of creating an account and making an initial deposit, which is typically small in value to make the victim feel at ease. To further establish trust, they might allow the victim to withdraw this initial deposit. 

6. Manipulating further investment
   ‍Once the victim has made an initial deposit, the scammer shares manipulated data and fake reports to show huge returns on the investment. They encourage the victim to invest even more money to capitalise on this supposed success. They often use time-sensitive offers or introduce a sense of exclusivity, and continue to share false profit reports while using emotional manipulation to stay in control.

7. Vanishing act
   ‍Eventually, when the scammer has gotten as much money as they can from the victim, they abruptly sever all communication and disappear. The fraudulent investment website or app is taken offline and the victim is left with no way to access their supposed investment or contact the scammer. In some cases, the scammer may even use information gained during the scam to commit identity theft or target the victim’s friends or family.

How to identify pig butchering fraud

Pig butchering scams are meticulously designed to exploit trust, and there are several red flags that can help identify these fraudulent schemes before they result in financial losses.

1. Unsolicited contact
   ‍Fraudsters often reach out via social media, messaging apps, or dating platforms, introducing themselves in a friendly or romantic manner, to build rapport.

2. Promises of high returns with little to no risk
   ‍A common feature of many investment scams, fraudsters often boast about the potential to earn easy, risk-free profits, using fake testimonials or fabricated success stories to lure in victims.

3. High-pressure tactics
   ‍Scammers frequently push their victims into making quick decisions. They may:
   • Create a false sense of urgency, claiming the opportunity is time-sensitive or exclusive, encouraging the victim to act before they can fully assess the situation
   • Insist on secrecy, asking the victim not to share the “investment opportunity” with others

Throughout the scam, the fraudster’s goal is to build trust and manipulate emotions, making the victim feel as though they are missing out on something significant. Businesses can help their customers recognise these scams and understand how they can protect themselves from becoming a victim.

How can consumers protect themselves?

Protecting a business and its customers from pig butchering scams starts with vigilance and caution. Here are a few steps enterprise businesses and their customers can take:

• First, always verify the legitimacy of individuals or companies that initiate unexpected contact, especially if they are offering investment opportunities. Conduct a thorough background check by researching the company online, reviewing their official website, reading customer reviews, and looking for any red flags or complaints associated with their name. 
• The same goes for fake profiles. Customers should be trained on recognising the warning signs of a suspicious profile or identity, such as profiles on online dating apps
• If an individual approaches a customer, the customer should verify their identity through multiple channels, and be cautious of anyone whose profile or history seems incomplete or suspicious.
• Consumers should remember that if an opportunity sounds too good to be true, it likely is. 
• Before making any financial commitment to a new person, customers should perform in-depth research about any proposed investment opportunity. Look for credible reviews, ratings, and industry references, ensure the platform or site is registered with appropriate authorities and consult with trusted financial advisors or professionals to help assess the risk. 
• They should be wary of high-pressure tactics, as legitimate investment opportunities will not rush someone into making decisions.
• Most importantly, they should never share personal or financial information with unverified individuals, especially online. Avoid sending money, disclosing account details, or clicking on unfamiliar links from unknown contacts. By staying informed and skeptical of unsolicited offers, customers can greatly reduce the risk of falling victim to these scams.

What should a customer do if they suspect that they have been scammed?

If a customer suspects that they are being targeted by a pig butchering scam, it's crucial to act quickly to protect their finances and personal information. Here are immediate steps they can take:

1. Contact their bank or financial institution
   ‍If they’ve already made any payments or shared sensitive financial information, they should reach out to their bank or credit card provider immediately and see if they can prevent the transaction from going through. The bank can help freeze an account, reverse unauthorized transactions and prevent further losses.

2. Stop communication with the scammer
   The customer should cease all contact with the individual or company they suspect is involved in the scam. Block them on any platforms they’ve used for communication to prevent the scammer from continuing to manipulate or pressure them.

3. Report the scam
   They should file a report with relevant authorities, such as the South African Police Services (SAPS) or South African Fraud Prevention Service (SAFPS) to make the case known.

4. Document everything
   It’s important to keep records of all communications with the scammer, including messages, emails, transaction receipts and screenshots of the fraudulent websites or platforms. This documentation can assist investigators and potentially help you recover lost funds.

By acting swiftly and reporting the scam, customers can minimise the damage and help authorities take action against fraudsters to prevent them from going after more victims.

The bottom line

Pig butchering scams, like many other types of fraud, prey on trust and vulnerabilities, leaving both individuals and businesses at significant financial risk. Recognising the warning signs, such as unsolicited contact, promises of high returns and high-pressure tactics, can be crucial in preventing these scams. By staying vigilant, conducting thorough research, and avoiding hasty financial decisions, customers can better protect themselves from falling victim.

To further minimise the risks and the aftermath of fraud such as pig butchering scams, Stitch takes proactive steps to protect its clients and their customers. Through transaction monitoring, Stitch identifies and flags suspicious activities in real time, alerting clients to potential threats before they escalate. Additionally, Stitch engages in information sharing, providing regular insights on emerging fraud trends, to help clients stay ahead of the curve. Finally, Stitch focuses on consumer education, equipping clients with tools to educate their customers so they can better identify and avoid scams. These efforts not only help prevent fraud but also mitigate the damage should an incident occur, reducing the financial and emotional fallout for businesses and their customers.