VANCOUVER — It might start with a text out of the blue.
Or a direct message on a social-media channel.
You respond, and a relationship develops with the stranger. You talk about common interests or perhaps about family.
This can go on for weeks or months.
Then the other person mentions an investment opportunity, sends you information on it, often a link to a website. They’ll show you how much money they’re making. You check out the investment’s website and it looks legitimate. You put a few hundred dollars in, to test the waters, and you get a great investment return. So, you put more money in, often using cryptocurrency.
That’s when the gate closes.
The investment and your new friend disappear.
Sammy Wu, manager of investigations for the B.C. Securities Commission, explains it bluntly: First they gain your trust, then they take your money.
The method has come to be known as “pig butchering” because it’s akin to fattening a pig before slaughter, says the B.C. Securities Commission, the province’s financial markets regulator, which issued a warning this week about the escalating threat of sophisticated online scams.
Wu said one investor put $1 million into one of these scams.
“When they disappear and you ask for more communication, it’s radio silence,” says Wu.
The increasing use of online communication and social media, and an increase in loneliness and isolation, which was exacerbated during COVID-19 and afterward, has precipitated a rapid increase in online scams, says Wu.
The losses to victims are skyrocketing.
Figures released by the commission show British Columbians reported $46.4 million in losses from online investment scams in 2023. That’s up from reported losses of $24 million in 2022 and $8.5 million in 2021.
Losses are believed to be much greater. The Canadian Anti-Fraud Centre estimates that only five to 10 per cent of online fraud is reported. That means in B.C., there are likely hundreds of millions in losses.
In an effort to warn British Columbians about the escalating threat of these sophisticated online scams, the B.C. Securities Commission has joined with the Canadian Anti-Fraud Centre, the B.C. RCMP financial integrity program, the Burnaby RCMP, the Vancouver Police Department and the U.S. Secret Service.
The groups direct people to their investment-scam education sites, including for the B.C. Securities Commission, the Canadian Anti-Fraud Centre and the U.S. Secret Service.
They’re warning people to be vigilant of all online scam methods, which include romance scams and the use of dating websites. They caution that sometimes, after someone has lost money, the new friend or someone else will offer to help get the money back as long as the victim pays additional money, supposedly for taxes or other fees.
That money disappears as well.
The agencies say that to protect yourself be suspicious about any unsolicited messages on social media, don’t invest solely on the advice of someone you met online and steer clear of promises of returns that are big and quick.
Doug Muir, director of enforcement for the B.C. Securities Commission, says public awareness is so important because it’s almost impossible to investigate, prosecute and recover the money. That’s because the scammers are outside of Canada, largely in Southeast Asia and Africa. Often, the scams are perpetrated by organized criminal groups.
