 "online fraud")
"Sneha told me she'd found my number in her phone contacts and was reaching out because she thought we might be old classmates from elementary school," Dhruv, a 64-year-old man from Noida, recalled. Although he didn't remember her, she seemed kind and empathetic. They bonded over their mutual love for gurdwaras and food, and Dhruv enjoyed the conversation enough to follow up with her the next day.
Soon, the text exchanges moved from the mundane to the personal. In January 2022, Dhruv confided in Sneha about his struggles to support his family, including his elderly parents and autistic son.
By March 2022, Dhruv had been conned out of more than Rs 6 lakh, a significant portion of which was borrowed money. His finances were in shambles. Dhruv had fallen victim to a scam known as “pig butchering.”
What is pig butchering?
“Pig butchering,” a term that refers to the practice of fattening a hog before slaughter, originated in China and went global during the pandemic.
"This kind of investment fraud is different from all other types due to a few distinctive characteristics. Emotions and greed are the main tools used to trick the buyer, and it's usually highly elaborate. An investing concept or even a romantic relationship could initiate it. The victim of these frauds frequently gets tricked into believing that the purported investment is legitimate and profitable, so the amount of money progressively increases," explained Ashok Hariharan, CEO of IDfy.
How do scammers operate?
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Pig butchering involves extensive grooming and relationship building. Scammers often spend weeks or months cultivating a relationship with the victim. "They might use an acquaintance's name or lure the victim with promises like, "Hey, you just need to invest Rs 500 a month, and you will get Rs 5,000 as a return within a month." They might even return this initial investment to gain trust, Ashok Hariharan said.
Why was Dhruv convinced?
Sneha told Dhruv about her success trading on Telegram and assured him it was safe to invest in cryptocurrency through the group, which had excellent financial advisors. She claimed her motivation was empathy, saying, "Because you have an ailing son. As a mother, I understand the pain that parents go through when their child is helpless."
How did the scam unfold?
Starting with a small sum, Dhruv's 'portfolio' quickly grew to six figures, showing healthy returns on the dashboard. However, when his 'investments' reached about Rs 6 lakh, they suddenly plummeted. Dhruv was abandoned by his 'advisors' and by Sneha, leaving him in a dire financial situation.
How do pig butchering scams differ from other types of investment fraud?
"This particular technique is different from other sorts of investment frauds, such as phishing scams or Ponzi schemes, which frequently use faster, more impersonal tactics," explained Ashok Hariharan. "It requires a more methodical and customised strategy, taking longer to establish trust before exploiting victims".
Role of social media
Scammers have shifted from traditional methods of investment fraud to using advanced communication technologies like messaging platforms, dating apps, and social media to interact with their victims. Unlike the overt and often unsolicited phone calls or emails typically associated with conventional scams, this approach allows them to gradually build rapport and trust. By leveraging modern channels, they can create intricate stories and exploit vulnerabilities over time, making detection more challenging.
"Scammers may even create fraudulent trading apps or platforms, displaying fictitious investment returns to deceive their victims. These false pretences enhance the appearance of authenticity and make the fraud seem real," noted Ashok Hariharan.
What are the warning signs to avoid falling victim?
— Unsolicited contact, especially on social media or dating platforms
— Insistence on secrecy in relationships or investments
— Requests for payments in cryptocurrencies or other hard-to-trace methods
— Unverifiable success stories and high returns claims
— Promises of significantly higher returns than market trends
— Claims of insider tips or connections in the investment industry
— Manipulation of emotions and exploitation of vulnerabilities
"One significant warning sign is unsolicited contact, where scammers initiate conversations out of the blue, often on social media or dating platforms," suggests Nikhil Varma, Managing Partner, MVAC Advocates & Consultants.
"If someone insists on keeping the relationship or investment secret, this is a significant warning sign. Additionally, requests for payments in cryptocurrencies or other hard-to-trace methods should raise suspicion. Verifying the legitimacy of any investment platform independently and being cautious of unverifiable success stories are crucial steps to avoid being scammed."
"The first red flag would ideally be promises of returns that are significantly higher than market trends," advises Vipul Jain, , Partner, PSL Advocates & Solicitors. "Claims by the scammer of insider tips or family connections in the investment industry are also major warning signs. Perpetrators skillfully manipulate emotions and exploit vulnerabilities to siphon money from their victims, often resulting in profound financial consequences for those affected."
Who are the common victims of these scams?
— People experiencing loneliness or isolation
— Individuals with little financial literacy or investment experience
— Those undergoing significant life changes or emotional turmoil
— Middle-aged and older individuals with larger savings or retirement funds
— Naturally trusting or empathetic individuals
— Users on platforms like Telegram and Instagram
— Homemakers and retired individuals seeking quick money
"People experiencing loneliness or isolation are more susceptible to forming online relationships where trust can be easily exploited," says Nikhil Varma. "Those with little financial literacy or investment experience are particularly vulnerable to pig butchering. Significant life changes or emotional turmoil can also make individuals more likely to fall for these scams. While these scams can affect anyone, middle-aged and older individuals are frequently targeted due to their typically larger savings or retirement funds. Additionally, individuals who are naturally trusting or empathetic are at higher risk as scammers exploit these traits to manipulate and deceive."
"Pig Butchering scams are designed for financial exploitation, preying upon the trust, greed, and lack of knowledge of individuals aspiring to enhance their wealth," adds Vipul Jain.
Telegram and Instagram are rife with channels where scammers set traps to lure users. Homemakers and retired individuals hoping to earn money quickly are often the easiest targets.
How can victims seek recourse or report the crime?
"In the event of falling victim to a Pig Butchering scam, individuals can seek recourse by lodging a formal complaint with the local police authorities or the economic offences wing, providing relevant documents and evidence to support their case," suggests Vipul Jain. "Victims should also report the scam to relevant regulatory authorities, such as the Securities and Exchange Board of India (Sebi) or the Reserve Bank of India (RBI), which have jurisdiction over certain types of investment schemes. Authorities can also undertake initiatives to educate the public about such sham schemes, equipping them to handle these situations more effectively."
— Lodge a formal complaint with local police or the economic offences wing
— Provide relevant documents and evidence to support the case
— Report the scam to regulatory authorities like Sebi or RBI
— Authorities can educate the public about such scams for better prevention
