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BSA/AML Hot topics: Three tips to protect your members from romance scams

By: Naomi Glass, BSA/AML Compliance Manager

2018 Statistics:

 

  • In 2018, the FTC received over 21,000 reports of romance scams (up from 8,500 in 2015)

  • Victims reported losing a total of $143 million in 2018 (as compared to $33 million in 2015)
Although Valentine’s Day has come and gone this year, that doesn’t mean your members are out of the woods when it comes to falling victim to romance scams. Quite the contrary, in fact. According to a new report issued by the Federal Trade Commission (FTC) on February 12, romance-related scams are on the rise and have cost victims more in total reported losses than any other type of consumer fraud in 2018.The numbers are staggering.

What is a romance scam?

Romance scams involve scammers preying upon the lonely and luring them into sending money. Fraudsters target singles through online dating sites or apps (i.e. Match.com, eharmony) and via social media sites like Facebook. The fraudsters will create a phony online profile and even go so far as to lift a photo of an attractive person from the internet to use on their profile. Sometimes fraudsters will also use fake names or assume the identifies of real people.

“Typically, the scammer builds trust by writing long letters over weeks or months and crafting a whole persona for their victims,” says FBI Supervisory Special Agent David Farquhar. “That big investment gives victims a false sense that the relationship must be real.”

Once the victim forms an emotional attachment to the fraudster, the pitch for money comes. The scammer will say they have some sort of emergency and need money right away for medical reasons, legal troubles, or some other misfortune. The urgent nature of the request makes it hard for the victim to take the time to do their due diligence, so they end up sending the fraudsters money. According to the FTC report, people often reported sending money repeatedly for one supposed crisis after another.

The movement of funds and financial impact to victims

The FTC report stated that the majority of victims sent the fraudsters money through wire transfers. The next largest group said they sent the money using gift cards and reload cards. Victims would mail the cards to the scammers or give them the PIN number on the back of the cards. The report indicated that these payment methods are preferred by con artists because it allows them to get quick cash, and the transactions are often irreversible.

In 2018, individuals who fell victim to romance scams lost $2,600 on average, about seven times higher than the median loss across all other fraud types. People aged 40-69 reported losing money to romance scams at the highest rates – more than twice the rate of people in their twenties. People 70 and older reported the highest individual median losses at $10,000.

How to protect your members from romance scams

  • First and foremost, know your members, and have a firm understanding of what their normal spending patterns are. For example, if an elderly member comes into your branch all of a sudden and requests to send a wire transfer to an individual in Nigeria, and this is not normal and expected activity for him/her, don’t just facilitate the transaction. Stop and question it. (And yes, this might require you to get a little nosey.) Ask the member what the nature of the relationship is between him/her and the overseas beneficiary and inquire about the intended purpose of the payment. If the member’s explanation is vague, doesn’t make a lot of sense, or if the member becomes defensive, you should be on high alert that he/she may be a victim of a romance scam.

  • Second, be familiar with the various romance-scam typologies. If a member tells you that she needs to send a wire to her “fiancée” in Ghana to help pay for medical bills because he was in a car accident, your ears should perk up, as this explanation is consistent with the romance-scam typology. Remember, victims are often conned into sending wires because the scammer is claiming that they need the money due to some sort of made-up emergency. If the reason your member wants to send money overseas is because their “sweetie,” who they have never met, has fallen on hard times due to a misfortune, be wary that they may be a victim of a romance scam.

  • Third, go with your gut. If, after speaking to the member, something still doesn’t feel right about the situation, it probably isn’t. Protect the monetary interests of your member. Don’t send the wire.