Romance Scams (#RomCons) Aren’t Just for Boomers

Peer-to-peer authorized push payment (APP) applications such as Venmo and Paypal have made going Dutch on dates easier than ever. They are also a quick and easy way to send money to people you know for bills, birthdays, and many other occasions. But beware – while an account takeover can be disputed and potentially reversed (i.e. the customer disputes the loss as an unauthorized transaction), when the customer is directing the payment, the liability usually falls on the customer. To address this, regulators in the United Kingdom are pushing for regulations to shift the liability for authorized push payments to the paying bank. But generally speaking, many banks do not reimburse on authorized fraud, and with limited avenues for shifting the liability, it becomes a loss to the consumer – even if a bad actor acquired the funds through fraudulent scams and coercion of the customer, as is the case in #romcons. 

Social engineering techniques are used in all kinds of fraud, but they are particularly effective in romance scams. The fraudster leverages the trust built on fake romantic emotional entanglements. The Tinder Swindler lied about his safety being threatened or an important upcoming business deal to create urgency. He often levied this urgency to coerce victims to open credit cards under their own names and provide him with the account details. This also helped him avoid a paper trail and liability as the charges were under his victims’ names and accounts, making them ultimately responsible for the debt.

“There are three things in the world that deserve no mercy: hypocrisy, fraud, and tyranny.” – Frederick William Robertson

To achieve trust, the fraudsters mold their identity to be a dream come true, personally tailored for each unique victim. Romance doesn’t always factor into the equation, either; scammers also take on the role of best friend. They can craft a false image supported by social media to add legitimacy to their claims. The Tinder Swindler assumed many identities, from a pilot to the heir of a diamond empire, all backed by Instagram accounts with “photographic evidence.” Using Photoshop skills as well as social engineering, he was able to manipulate situations to contain the key ingredients of trust, love, and urgency.

Another example comes from the sitcom How I Met Your Mother. Barney, a playboy, assumes the identity of Lorenzo Von Matterhorn, who is the “Billionaire of the Week.” He backs this up with a website you can still visit today: Big Business Journal | Lorenzo von Matterhorn. A note of caution, always check multiple sources and scrutinize anything found on the internet, as internet presence does not necessarily equal factual legitimacy.

“In actual fact, the money was just being recirculated between [Charles Ponzi’s] victims.” – Connor Sephton

A Ponzi scheme is an investment fraud that “involves using payments collected from new investors to pay off the earlier investors” – Corporate Finance Institute. In the case of the Tinder Swindler, he used money scammed from some victims to fly to, wine, and dine his other victims and vice-versa, all while living the high life with luxury hotels, fine food, and couture fashion. In many cases, he also tricked the victim with overly generous returns, employing them at his fake companies, and sending fake checks and made-up bank transfer receipts. This further strengthened the trust, at least until the checks didn’t go through.

In the case of one victim, the scammer brought her in on the operation, promising a big return if she helped him. Victims can easily become a part of criminal schemes, and they bear responsibility for these scams if they willingly and knowingly accept fraudulent deposits and/or pass them on to other fraudster-controlled accounts. This is called “money muling,” and law enforcement agencies have been aggressive in carrying forward prosecutions of mules, both in cases where customers fail to heed warnings that they are helping a fraudulent scheme as well as actively participating in such. Another note of caution: if an opportunity seems too good to be true, it probably is. 

It’s easy to make official-looking documents. You don’t even need to be proficient at Photoshop; a lot can be accomplished with the ubiquitous word processer used to type this piece. To add further legitimacy to his claims, the Tinder Swindler falsified numerous items including bank statements, pay stubs, checks, bank transfers, websites, receipts, and even passports. He employed a multifaceted approach by mixing these fake documents with his real-time shared Google geolocation or a live video call from WhatsApp. In order to achieve his financial goals at the scale needed to fund his lavish lifestyle, specific plays were repeated across victims, which made it easier to quickly customize tried and true document and video templates. 

To learn more about how NICE Actimize can detect Authorized Fraud before the loss occurs, click here; also check out our Fraud Insights Report to stay up-to-date on new and emerging fraud threats.