NASAA's annual report reveals the devious techniques scammers and fraudsters use to trick investors
Have you heard of pig-butchering scams? You should have because they are among the biggest risks to retail investors in 2023.
A variant of the social engineering techniques that are behind romance scams, ‘pig-butchering scams’ are so called as they involve fraudsters fattening up the pig (in this case an unsuspecting investor) by gaining their trust, before scamming them.
Scammers and fraudsters are getting more devious and more determined in their efforts to relieve hard working Canadians of their wealth, especially with a growing share of digital assets, and sadly, they are also achieving success.
In its newly-released annual report on the biggest threats to retail investors, the North American Securities Administrators Association (NASAA) ranks digital asset frauds as the scheme that currently presents the most danger to the public (62%).
Pig butchering is the second biggest risk (46%).
“Pig-butchering schemes are effective because bad actors have become adept at using fear and anxiety as tools for disarming investors,” said NASAA Enforcement Section Committee Co-Chair Brett Olin. “Skepticism and caution are the best defenses to pig-butchering schemes. Investors should take the time to independently investigate promoters and products before sending their funds.”
The third biggest risk highlighted in the report are social media and internet schemes (41%).
Economic fears
The report is the result of surveying state and provincial securities regulators in the United States and Canada.
It found that more than 70% of responses indicated their agency was investigating or recently brought enforcement actions against malicious actors playing on fears of economic uncertainty.
“Fraudsters are continuing to leverage broad public interest in digital assets,” said Andrew Hartnett, NASAA President and Deputy Commissioner of the Iowa Insurance Division. “However, their pitches often have nothing to do with blockchain technology and instead play on fear of missing out or get rich quick schemes along with other emotions. In many cases, they are downplaying the need for due diligence and are pressuring investors to quickly part with their money.”
NASAA urges investors to remember the old adage that if something looks too good to be true, it probably is. At the very least, retail investors should do their research and not be pressured into making hasty investment decisions that they may come to regret.
