Love is a mystery. And at the age of Covid-19, it is increasingly a scam.
Romance scams – in which scammers pretend to be a love interest for bilk modest partners – have risen during the pandemic, say compliance officers and regulators. The scenario puts some companies on alert for suspicious financial transactions.
About 32,800 romance scams were reported last year, up nearly 31% from 2019, according to Federal Trade Commission data released last week. Consumers reported losing a record $ 304 million to the scams, an increase of nearly 51%, the FTC said.
Romance scammers often build fake online personas to develop relationships with victims through online dating apps or social media platforms. However, they keep their distance and make excuses for why they can not meet in person. Sometimes it’s a fake military deployment, other times a mission on an offshore oil rig, said Monica Vaca, assistant director of the FTC. When a virtual relationship strengthens, scammers make requests for money, and often disappear when the cash is in hand.
Current conditions are ripe for such fraud, Vaca said. Social distancing has complicated personal dating. People spend more time online. There is a general 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 reach a vaccine agreement.
Travel restrictions and health reasons give fraudsters seemingly legitimate excuses to avoid meeting victims. “We see in our reports that people say things like, ‘Oh, I can not meet; I have just received my Covid diagnosis, ” said Vaca. “So it becomes part of the story.”
Consumers need to be vigilant, she said, but so are companies that are bound by money laundering rules to report suspicious activity. “They play a very important role in this,” Vaca said.
Preventing fish-like transactions has become easier in recent years as financial institutions and money transfer companies have strengthened their data analysis tools. When scammers change tactics, companies can adjust their systems to adapt to new patterns, enabling faster detection of suspicious activity or suspicious customers.
This is partly the case with Western Union Co.
has managed to stay up to date on scammers’ evolving tactics, said Tyler Hand, transfer manager for the money transfer company. Improvements in the Denver-based company’s surveillance technology in recent years have led to a decline in the number of romance scams reported by the company, including the last calendar year, he said. Some of these changes were made as part of a settlement with federal authorities, including the FTC, due to alleged errors by police customers who may be involved in fraud.
One thing that cannot be solved by an algorithm: human gullibility in the face of possible romance. That is why Western Union and competitor MoneyGram International Inc. say that customer trait and education are also key.
MoneyGram strengthened its surveillance in part due to FTC claims that the Dallas-based company failed to take steps to crack down on counterfeit money transfers, claims the company settled in 2018. In addition to improved technology, MoneyGram also has a process to talk to customers according to Andy Villareal, MoneyGram’s compliance manager, marked as potential fraud victims, which has helped reduce romance fraud by using the company’s services.
If a requested money transfer is marked as suspicious, MoneyGram can inquire whether the sender has actually met the intended recipient before the transfer is completed. The company can also tell the customer that he or she may be exposed to fraud, he said.
Such conversations are often met with denial; people will not think they have been cheated because they have established a connection with the recipient, Villareal said.
“The reality is that scammers are very good at identifying the types of psychological aspects they can link to their victims,” he said. “They take advantage of these and get very practiced on it.”
Write to Jack Hagel at email@example.com
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