Love is a mystery. And in the era of Covid-19, it is increasingly a fraud.
Romance scams, in which scammers pretend to be a love interest to scam unpretentious partners, have emerged during the pandemic, compliance officers and regulators say. The scenario is putting some companies on high alert for suspicious financial transactions.
About 32,800 romance scams were reported last year, nearly 31% more than in 2019, according to data from the Federal Trade Commission released last week. Consumers reported losing a record $ 304 million to scams, an increase of nearly 51%, the FTC said.
Romance scammers often create fake people online to develop relationships with victims through online dating apps or social media platforms. However, they keep their distance, making excuses as to why they can’t meet in person. Sometimes it is a bogus military deployment, other times a fabricated assignment on an offshore oil rig, said Monica Vaca, associate director of the FTC. As a virtual relationship grows stronger, scammers ask for money, which often disappears once the cash is in hand.
Current conditions are conducive to such fraud, Vaca said. Social distancing has complicated in-person dating. People spend more time online. There is a widespread increase in the use of dating apps. And the pandemic has increased the perceived credibility of requests for money, for example, medical bills or car repairs to get to a vaccination appointment.
Travel restrictions and health reasons are also giving scammers seemingly legitimate excuses to avoid encountering victims. “We see in our reports people saying things like, ‘Oh, I can’t get together; I just got my Covid diagnosis, ‘”Vaca said. “So that becomes part of the story.”
Consumers need to be vigilant, he said, but so do companies that are required by anti-money laundering rules to report suspicious activity. “They play a very important role in this,” Ms. Vaca said.
Suspicious transaction prevention has become easier in recent years as financial institutions and money transfer companies have beefed up data analytics tools. As scammers change tactics, companies can adjust systems to accommodate new patterns, allowing faster detection of suspicious activity or questionable customers.
In part, this is how Western Union Co.
has managed to stay on top of the changing tactics of scammers, said Tyler Hand, chief compliance officer for the money transfer company. Improvements in the Denver-based company’s monitoring technology in recent years have led to a decline in the number of reported romance scams at the company, even in the last calendar year, he said. Some of those changes were made as part of a settlement with federal authorities, including the FTC, for alleged flaws in police clients who could be participating in fraud.
One thing that cannot be solved with an algorithm: human credulity in the face of a possible romance. That’s why Western Union and its competitor MoneyGram International Inc. say that customer outreach and education is key, too.
MoneyGram strengthened its oversight in part because of allegations by the FTC that the Dallas-based company failed to take action to crack down on fraudulent money transfers, allegations the company resolved in 2018. In addition to the improved technology, MoneyGram it also has a process for talking to customers. identified as potential victims of fraud, which has helped reduce romance scams using the company’s services, according to Andy Villareal, MoneyGram’s chief compliance officer.
If a requested money transfer is flagged as suspicious, MoneyGram may ask if the sender has actually known the recipient before completing the transfer. The company could also tell the customer that he or she could be the victim of fraud, he said.
These calls are often met with denial; people don’t want to believe that they have been scammed because they have established a connection with the recipient, Villareal said.
“The reality is that fraudsters are very good at identifying the kinds of psychological aspects that they can connect with their victims,” he said. “They exploit them and they become very adept at it.”
Write to Jack Hagel at [email protected]
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