Investment fraud schemes significantly threaten financial institutions and their customers in the ever-evolving financial crime landscape. One such scheme that has gained attention in recent years is known as "pig butchering." What exactly is a pig butchering scam? In the context of financial crime, this troubling analogy refers to a manipulation technique used to exploit vulnerabilities in a victim through frequent interactions and social engineering. Today’s pig butchering scams usually involve investment schemes and cryptocurrency fraud.
Pig butchering scams originated in Southeast Asia and have escalated significantly in the United States. A scam usually begins with online contact via social media or dating apps. Scammers build up a victim’s trust and gain access to their online account information, sometimes “fattening the pig” by soliciting more investment in cryptocurrency before “slaughtering the pig” and stealing the cryptocurrency.
The analogy is crude but accurate. “It’s a sophisticated con, and you can see that because it’s a long-term con,” said James Barnacle, who runs the FBI’s Financial Crimes Section. According to Barnacle, there were well over $3.5 billion of reported losses due to pig butchering in 2023 and around 40,000 victims in the United States. He's even seen losses as large as $4 million.
In a recent NBC News report, Barry May, a divorced and retired insurance adjuster living in Mississippi, recounted his personal experience with “Anna,” who reached out to May over social media. The two started chatting on Facebook. Soon, Anna was sending explicit photos. May was smitten. She told him they could be together, but first, she needed a favor. Her aunt, she said, was holding $3 million of her money, and she needed May to invest in cryptocurrency so her aunt would release that money to her.
She promised huge returns. May sold property and liquidated his 401(k), sending the woman more than $500,000 — his life savings. An account on a website appeared to show his holdings. May was about to take out a loan to send more until an FBI agent called. “They said this is a major fraud situation, and I’m not the only one,” May said.