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Thursday, June 30, 2022

CFTC Customer Advisory Warns Online Daters and Social Media Users about Trading Scams

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Washington, D.C. — The Commodity Futures Trading Commission today issued a Customer Advisory warning users of online dating and social media platforms about a recent increase in scams that lure victims into sending their money to fraudulent websites that claim to trade foreign currency exchange (forex) contracts, precious metals contracts, or digital assets. This advisory is part of Dating or Defrauding?, a national effort to raise awareness about romance scams. [See CFTC Press Release No. 8491-22]   


While romance scams are not new, they can defraud people of any age, including individuals who are more comfortable with online dating and buying digital assets.  Fraudsters may use comprehensive social media profiles and well-practiced scripts to convince their victims that they want to start a romantic relationship. Within a few weeks, or even less, the fraudsters may coax their victims into believing they are in a caring relationship.

Eventually, conversations turn to money, salaries, and the markets. The fraudsters then pose as successful traders, or have a friend or relative that is supposedly a successful trader, and offer to help the victims trade forex, precious metals, or digital assets. However, the trading platforms the fraudsters recommend are fraudulent.


Due to the nature of these scams, the victims rarely recover their funds.

The advisory, which describes the fraud more fully, includes 10 tips to help dating app and social media users protect themselves and avoid these frauds.

Dating or Defrauding?



Recently, the CFTC, together with the Consumer Financial Protection Bureau, the Department of Homeland Security’s U.S. Immigration and Customs Enforcement, the U.S. Postal Inspection Service, the U.S. Treasury’s Financial Crimes Enforcement Network, and USAGov/Outreach, a division of the U.S. General Services Administration’s Technology Transformation Services launched Dating or Defrauding?, a national effort to alert consumers to romance scams.

The multi-agency campaign will educate consumers about the various types of scams, how to recognize them before losing any money or other assets, and some steps to take if they are victimized.

About the Office of Customer Education and Outreach (OCEO)

OCEO, part of the Market Participants Division, is dedicated to helping customers protect themselves from fraud or violations of the Commodity Exchange Act through the research and development of effective financial education materials and initiatives. OCEO engages in outreach and education to retail investors, traders, industry organizations, and the agricultural community. The office also frequently partners with federal and state regulators as well as consumer protection groups. The CFTC’s full repository of customer education materials can be found at: https://www.cftc.gov/LearnAndProtect.

The Customer Advisory is available in full below and on cftc.gov. 

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The Commodity Futures Trading Commission advises the public to avoid offers to trade foreign currency contracts (forex), precious metal contracts, and digital assets with people they meet through dating apps or social media, even if the relationship has been building for weeks or months.

Romance scams can target people of any age, including individuals who are comfortable using online dating apps and trading forex, precious metals, and digital assets. The CFTC has received complaints about frauds that originated on dating apps and social media platforms. In many cases, the victims believed they were in romantic relationships that had formed over several weeks. These frauds are often conducted by people and entities outside the United States and use unregistered trading websites or third-party trading software.

Two Deceptions
Initial contact is made through dating apps, social media, or “wrong numbers” made through private messaging apps. The fraudsters commonly pose as executives, business owners, or successful financiers and use extensive social media personas to support their stories. They often share pictures of home-cooked meals and pets, and research the cities they’re supposedly from so they can reference restaurants and other sites. In a short amount of time, they are calling or texting daily, and using endearing language, but are too shy or unable to video chat or meet in person.

Over a few weeks, conversations subtly turn more and more to money and markets. The fraudsters may claim to be professional traders, trade as a hobby, or have a relative who is a successful trader. Their mood often is colored by their purported performance in the market. They tend to talk about their own extravagant spending, and probe the victims about salaries, debt, or money problems. They start to discuss future goals and dreams together as a couple, planning to meet each other soon. Once trust is built, the second phase of the scam begins. The fraudsters offer to introduce the victims to trading.

Heartbreaking Losses
The scams concentrate on trading digital assets, or trading foreign currency or dollar-gold contracts (also known as “forex”). In cases involving digital assets, victims are asked to buy virtual currency and transfer it to the scammer’s digital wallet or to a fraudulent trading platform. In cases involving forex trading, victims are told to download forex trading software or mobile apps. Money is then sent to an offshore company that manipulates the trading app to display winning trades and outsized returns, encouraging victims to invest more.

Victims are commonly encouraged to start small. The fraudsters may also walk them through a successful withdrawal to demonstrate the fraudulent broker or website can be trusted. Then, victims are nudged to invest more. Eventually, the victims may be faced with opportunities that require large investments. The offer may be made to couples only, or the love interest may offer to loan part of the required principal to the victim to demonstrate they’re “in this together.” The investment also may involve a sudden deadline or urgent decision.

After making significant investments, even as much as tens of thousands of dollars it becomes impossible to make withdrawals. Suddenly, there are taxes, commissions, or fees that must be paid. Customer service problems are another common ploy. Typically, the only way to resolve matters is to increase the investment. And, any talk of withdrawing money gets pushback from the love interests, who have been in on the scam from the start. They become angry, and shame victims for their fear, mistrust, or lack of commitment.

When victims finally decide to get out, they face the stress of nonresponsive customer service operations and increasingly angry love interests who demand more money, or even blackmail victims by threatening to reveal compromising photos or messages. When victims ultimately refuse to pay, all communication stops, and the fraudulent trading website, “customer service” representative, “broker,” love interest, online profiles, and the victim’s money disappear.

Because the funds are commonly sent overseas or via virtual currency, recovering lost money is nearly impossible.

Dating App Fraud: 10 Ways to Protect Yourself and Your Money

  1. Keep conversations on the dating or social media platforms. Many platforms utilize harmful language filters that can detect fraud. Fraudsters want to quickly move conversations to private messaging apps to avoid detection.
  2. Screen capture the love interest’s profile picture or other pictures and use reverse image searches to see if they have been used in other scams or by other people.
  3. If contacts refuse to meet or video chat, that should be a red flag. Try other ways to verify their identities in real-time. For example, ask the person to send a selfie holding a piece of paper with your name and date next to his or her face.
  4. Check to be sure the people or firms you trade with are registered with federal or state authorities. Relying on registration alone won’t protect you from fraud, but most scams involve unregistered entities, people, and products. Learn more, visit cftc.gov/check.
    • For forex trading, check with the National Futures Association, nfa.futures.org/basicnet.
    • For virtual currency, see if the platform is registered as a money service business with the Financial Crimes Enforcement Network (fincen.gov/msb-registrant-search) or with your state using the Nationwide Multistate Licensing System (csbs.org/nationwide-multistate-licensing-system).
  5. Never make payments or give sensitive information to anyone you’ve only met online.
  6. Before making any investment, get a second opinion. Talk it over with a financial advisor, trusted friend, or family member.
  7. Don’t trade in markets or products you don’t fully understand.
  8. Never pay more money to get your money back. If you suspect fraud, report it immediately to the Internet Crime Complaint Center, ic3.gov, or cftc.gov/complaint.
  9. Learn more about romance scams at consumer.ftc.gov or other reliable websites.
  10. Learn more about spotting and avoiding forex, precious metals, or digital asset frauds, and stay current on developing trends, visit cftc.gov/LearnAndProtect.

 


This article was prepared by the Commodity Futures Trading Commission’s Office of Customer Education and Outreach. It is provided for general informational purposes only and does not provide legal or investment advice to any individual or entity. Please consult with your own legal advisor before taking any action based on this information. This advisory references non-CFTC websites and organizations. The CFTC cannot attest to the accuracy of information in those non-CFTC references. References in this article to any organizations or the use of any organization, trade, firm, or corporation name is for informational purposes only and does not constitute endorsement, recommendation, or favoring by the CFTC.



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