The banking industry is seeking help from the federal government and the social media industry to stop a growing crisis that is costing Americans billions of dollars each year: online romance scams.
These digital crimes have proliferated since the pandemic, as criminals pose as attractive associates and reach out to lonely Americans on social media.
“We really need help,” Paul Benda, executive vice president of risk, fraud and cybersecurity at the American Bankers Association, said in an interview with CNBC. “We need the social media companies to shut down these people who are spreading this. We need law enforcement to commit to trying to prosecute some of these people. Unless you put a bad guy behind bars, that guy is going to continue.” doing what he's doing.” doing.”
Experts estimate that known fraud cases amount to billions of dollars each year. Given that many victims do not report their losses to anyone, total losses could run into tens of billions of dollars a year, they say.
Romance scams are run by organized criminal gangs, often based in Southeast Asia, who create fake avatars on social media and use them to connect with potential American victims. According to experts, their targets are men and women, old and young, educated and uneducated.
The common theme is loneliness and the willingness to interact online. Once the victim responds to the message, the avatar operators launch a lengthy campaign (often hours of texting each day) designed to persuade the victim that she has fallen in love with a real person. The psychological power of the relationship can take hold surprisingly quickly.
“Some people get hooked in a matter of weeks,” Benda said. “It's that really hot glow of a relationship where text messages are sent constantly, all day and all night, and they get hooked on it.”
Once that psychological hook is established, the scammer turns conversations into money. In some cases, they present the victim with a seemingly safe investment opportunity, or take advantage of the victim's empathy and solicit money for an expensive but bogus medical procedure.
“In some of the scams I've heard about, you literally have people emptying their bank accounts to send the scammer everything they have,” Benda said. “They want to do anything for the person they love… And they are just evil people who take advantage of vulnerable people.”
Experts CNBC spoke to said social media companies should do more to limit this type of reach across their platforms and do a better job of cracking down on big perpetrators.
They also saw the value of regulatory changes that would allow financial institutions to talk to each other about customers who are at risk. Some victims may be depleting an institution's savings account to send funds to a scammer, while the institution managing their 401(k) retirement account remains unaware.
Scammers often instruct the victim on how to access and transfer funds. And Benda noted that banks are in a difficult position, even when they suspect their customer is being defrauded.
“We're legally obligated to give you access to your funds, period. So we can't stop you from withdrawing money from your bank account. Not even if we think… it's going to destroy your life,” he said. .
The experience can be emotional even for bank employees watching the scam unfold.
“We've heard stories where we know a bank teller who was sobbing… talking to a long-time customer, begging him not to do this kind of thing, and in the end, no, we have to give him access to his funds.”, Benda said.
Banks generally do not reimburse a customer for losses from romance scams, Benda explained, because the customer transferred the money of their own free will. And reimbursing victims would likely create a market that would attract more scammers.
Erin West, a deputy district attorney in Santa Clara County, California, estimated that between $30 billion and $50 billion will be lost to romance scams in 2022.
“It's a staggering number. It's huge,” he said, adding the caveat that coming up with an estimate may involve some guesswork, as victims may be reluctant to report the details of their own financial humiliation.
But West, who is part of a national group of prosecutors trying to shed light on the problem, said the scale of the emotional disaster may be even worse. Discovering these scams can lead to the loss of marriages, careers, or a permanent change in financial situation.
“I've been in law enforcement for 25 years, I've committed sex crimes and homicide, and I've never heard the depth of despair that is felt when someone realizes that the life they thought they would have was completely gone.” , said. “One day, losing a marriage and every last penny they have is traumatic for people.”
West explained that there is a very human reason why lonely people fall for these scams.
“This type of crime goes to the very core of what we want in life. We want to feel loved,” he said. “And we want to have a person to come home to, even if it's by text, who loves us, understands us, and thinks about us. And they give us exactly that.”
“And then they provide a dream where you can not only be loved, but you can be financially comfortable beyond your wildest dreams,” West said. “It's easy to call it lust and greed, but what it really is is comfort on both levels.”
—CNBC's Bria Cousins contributed to this report.
