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Kate Linebaugh: Our colleague Robert McMillan covers cybersecurity and he’s been reporting on a growing problem, texting scams. Maybe you’ve gotten one. They’re these text messages that come from numbers you don’t recognize and usually they try to strike up a conversation. You probably ignore them, but Bob, he doesn’t.
Robert McMillan: For the last month or two, every time I get one of these obscure text messages, I respond and I got a text message on Friday at 4:00 PM. I haven’t answered it, but I think I should answer it now. Here, let me read the message to you.
Kate Linebaugh: Okay.
Robert McMillan: It says, “Good evening. I hope you had a good and productive day. Long time no see. I have updated my number. How are you doing?”
Kate Linebaugh: You don’t recognize the number?
Robert McMillan: No, I don’t recognize it. It’s a 530 number.
Kate Linebaugh: Okay. And what’s your reply?
Robert McMillan: I’m going to say, “I think you have the wrong number. Do I know you?” But I’ve been doing this for a couple of months and usually what happens is they send me back a picture right away, and it’s usually a young, attractive looking person, and then they say, “I don’t know you, but you seem interesting.”
Kate Linebaugh: But the people texting Bob aren’t actually interested in him, they’re interested in his money. These texts are part of a new crypto scam. It’s sophisticated and it can go on for months. It’s called pig butchering.
Robert McMillan: So the problem is, if you respond to these messages, they have these scripts they use that are basically designed to entice a certain type of person into a relationship. So when it does work, it’s just particularly devastating. It can ruin your life, it can eliminate your life savings, and that’s what has happened to a number of people, to thousands of people in the United States over the last year. And those people have really, they’ve lost a lot of money because of this.
Kate Linebaugh: Welcome to The Journal. Our show about money, business and power. I’m Kate Linebaugh. It’s Wednesday, November 2nd. Coming up on the show, pig butchering, a devastating texting scam that’s costing people millions.
Pig butchering starts with a seemingly innocent text message and once the scammers catch a victim, they convince them to start investing in crypto. They have the victim set up an account on a fake crypto exchange and over the course of months, they steal more and more of the victim’s money. And why is this called pig butchering?
Robert McMillan: It’s a reference to the idea that you’re fattening up this fake online account. You think you’re making money, so that’s the fattening of the pig, and then at the point when you actually realize you have been scammed, you’re dead to them, you’re butchered.
Kate Linebaugh: And who is behind it? Where are these scammers based?
Robert McMillan: There are a lot of people doing it, but the group that I interviewed for my story, the Global Anti Scam Organization has identified some Asian based scammers. So they’re thought to be run by Chinese individuals who bring scammers into compounds in Laos or other Asian countries where they sort of work like office jobs scamming people. It initially, a few years ago, these scams were concentrated on victims in China, but they’ve, in the last two years, they’ve expanded and they’re hitting the United States right now.
Kate Linebaugh: How long has it been around?
Robert McMillan: Well, pig butchering, I mean, the name is new. Yes, it was first coined in Asia and China about four years ago, I think, this scam was happening there, but it moved to the United States last year and it’s really taken off this year.
Kate Linebaugh: Bob says these scamming operations target people who are educated and wealthy. They also look for someone who might be a little lonely.
Robert McMillan: The thing that really got me about it is it just preys on this fundamental human decency of you get a wrong number and you tell somebody, “Hey, I’m sorry you made a mistake,” and that… I’d like to live in a society where you could have serendipitous interactions with strangers and they can lead to friendships, that’s something that I think is a mark of a healthy society and that’s being abused with this scam.
Kate Linebaugh: These kinds of scams, where the scammers gain the trust of the victim by building a relationship with them, they have a name, they’re called confidence scams.
Robert McMillan: Pig butchering is from that family, but it has sort of a crypto twist to it. You believe that you’re making a lot of money, you believe you’re fattening your account, but you’re making all this money on a fake crypto exchange, on a website that looks like it’s a crypto exchange, but it’s just a website run by the scammers. So they give you a little account there and you make some initial trades and you look like you’re making a lot of money.
Kate Linebaugh: You’re feeling actually smart because you’re like, “Oh, I’m doing the thing that the cool kids do, I’m making money on crypto.”
Robert McMillan: That’s right, “I have this friend who I’ve met online who understands crypto and I’d heard about it and finally, I’m doing what everyone else is doing, making big money.”
Kate Linebaugh: Right and it feels like it preys on this… the fact that many people don’t understand crypto and they think, “Oh, some people became billionaires, and maybe I could.”
Robert McMillan: Right. And the fact is that cryptocurrency is really an amazing rail for moving money very quickly across borders. It’s really good at that. And if you’re a scammer in China or in Asia and you want to get money from people in America, the old techniques were slow and painful. You’d have to get somebody to… You’d have convince them to go to a Western Union and wire the money. Now you don’t have to leave your house, you could do it in your pajamas. You can be swindled for a million dollars in your PJs.
Kate Linebaugh: So crypto is sort of an essential piece of this new scam?
Robert McMillan: Of the pig butchering, yeah.
Kate Linebaugh: Yeah.
Robert McMillan: Yeah. So it’s that unknown, the fact that if you’re going to be involved in cryptocurrency, it’s not that weird that you would go to a website that you’ve never seen before. People aren’t buying it at Bank of America or Wells Fargo. So already you’re dealing with this world where the names aren’t so well known to everybody and who’s legit and who’s not legit it’s just not common knowledge at this point.
Kate Linebaugh: FBI officials told Bob that in the US last year, pig butchering cost victims more than 400 million dollars.
Robert McMillan: It’s kind of remarkable how far they will go to convince you that they are real people. You may have heard of the Nigerian prince scam where you get these clumsily written email messages that you’re supposed to respond to in order to make millions of dollars. This is far beyond that. So I think the amount of effort that they’re willing to make to sort of convince you that they’re real is greater than what a lot of people have been expecting.
Kate Linebaugh: Coming up, what pig butchering looks like through the eyes of one victim.
Jane Yan is in her fifties. She was born in China and now lives in Delaware with her husband. She works as a business analyst at a software company, and in January she got a text.
Jane: The first text message was saying, “Are we going to the salon tonight?”
Kate Linebaugh: And what did you think when you got that?
Jane: I think that person got the wrong person, so that I respond, “I think you got the wrong person. I don’t know who you are.”
Kate Linebaugh: But this random number kept the conversation going. He told her his name was Eric, that he was in Seattle for business and was on his way back to China. He told Jane he had a daughter there and that his parents were helping take care of her. Jane thought he sounded like just a regular person and they moved their conversation over to WeChat, a Chinese social media app.
Jane: After the first day… actually he greet me daily, “Good morning. How you doing?” Even at the beginning, I wasn’t really desire to engage the conversation, but I thought he was someone very consider, very kind. Then the conversation getting to talk about the family, talk about food, talk about travels and then eventually got to the investment, obviously.
Kate Linebaugh: And do you remember when he brought up this investment?
Jane: If I remember correctly, it was January the 28th, a week into the conversation, and at the beginning I just brushed him off because I didn’t understand those stuff. I said, “Oh, I don’t understand this,” and I didn’t want to get into detail, talk about it.
Kate Linebaugh: Did you have interest in crypto?
Jane: Not particularly because I don’t really…. I don’t do lots of investment myself. Yeah, I have some stocks, but I don’t understand crypto that well. So I didn’t really have any desire to invest in there. But he say to me, “Oh, don’t worry. I will teach you. I walk you every step the way.”
Kate Linebaugh: And he did. Eric helped Jane open an account on a legitimate crypto exchange, Coinbase, and then he helped her set up another account on what appeared to be a different crypto exchange, but this exchange was actually fake.
Jane: I had my log in, I can go and check my account, so I mean, now I notice how shady these platforms are, but back then I thought, “Well, yeah I have my own log in. How wrong can it be? It just like another bank account.”
Kate Linebaugh: In February, Jane put $5,000 into her account and made her first transaction. In three minutes, her investment rose 20%, to $6,000.
Jane: After first trade, I was shocked. I was like, “Wow, you can make money that way, really?” And of course he has an uncle that was giving us the inside information and I was so appreciative. I was like, “Wow, I see you share this inside information with me.” And I say, “Thank you.”
Kate Linebaugh: Right.
Jane: Yeah.
Kate Linebaugh: Did you talk to your family about it?
Jane: No, I didn’t. Also, he told me not to tell anybody. He said, “Don’t tell anybody about investment. People think that’s lies.” And he said this inside information, I cannot tell anybody else.
Kate Linebaugh: Jane was convinced that this was a safe bet. She could check her investments just like any other bank account and she could see her money was growing. So in March, Jane went in big. She put $400,000 into the account. Jane said Eric offered to go in on the investment with her and put $100,000 more into her account. And that didn’t strike you as strange at the time?
Jane: No, actually I thought, “Wow, he’s so nice. Why was…” I’m like, “You sure?” He said, “Yeah.” He said, “Let’s make money together so we can go travel together.”
Kate Linebaugh: And where was your money coming from, $400,000?
Jane: I took out from our savings checking account and about $250,000 of them coming from my inheritance RA that my godmother left me.
Kate Linebaugh: Again, Jane watched the money grow. But then, she got an odd message. She was told she made a mistake and her account was locked. To unlock her account, Jane was asked to invest more money.
Jane: I did have one moment of questioning say, I was like, “That doesn’t sound right to need additional more money unlock the account.” And then he say to me, “Well, that’s the way how they operate. That’s the way how crypto operates.”
Kate Linebaugh: Jane says, Eric told her to reach out to customer service. Customer service told her she would need to match the money in her account to unlock it, another $600,000. That customer service, of course, was not real, but it felt real to Jane and it gave her the confidence to keep investing.
Jane: I had asked my husband for his retirement account and I told him… Well, I didn’t tell him the truth. I told him, I say, “If I don’t put this money, I will lose all my other investment.” And the scammer basically say to me, “You can just borrow. We put in, you can take it right out and then we can pay him back right away.” So at the time, my mind was thinking, “I’m just borrowing it and I can pay him back right away.”
Kate Linebaugh: All right, so you put in another $600,000, you have 1.2 million in this fake account. What happens from there?
Jane: Well, we did more trades and… actually we did three or four trades, I don’t quite remember, but so the last trade when we done and I had 3.6 million dollars in that account.
Kate Linebaugh: Wow.
Jane: Yeah.
Kate Linebaugh: And are you making plans for this money in your head?
Jane: Yeah. I was like, “Oh, great. I can take the money out. I can pay my husband back. I want to put back whatever the initial investment I taking out, I want to put them all back. And in the fall comes my kids, the tuition’s all set.” They have four more years each. So I was like, “Okay, my son can go any university he wants to.” And then I was just thinking my husband writes music, he helped me. He helped me and he did me a favor and I can give him extra money for him promoting his music. So I was making plans in my head with that money.
Kate Linebaugh: But before she could withdraw the money from her account, the fake crypto exchange told her she’d have to pay taxes on her gains. And so she scraped up the money to do that. But then she was told she had another charge.
Jane: Now that is the day I felt very uncomfortable and nervous, and the next day I report to the police.
Kate Linebaugh: What did that moment feel like when you realized something was wrong?
Jane: I was very scared. I should have felt numbed. I didn’t know it was this kind of crime at that moment either, and I just felt something’s wrong. And I talked to the police and the police basically told me, “This kind of scam happens every day.” I’m like, “What is scam?” And I had to go online to search what is scam, because I had no idea what scam it was. I think the first two weeks I didn’t have the time to realize the damage done to us, but I was more at going at how can I resolve this problem? How can I find someone to help us?
Kate Linebaugh: Because you had been duped, you believed that this platform was legitimate.
Jane: Yes. Yes.
Kate Linebaugh: You didn’t understand the connection between these two things and that was all part of one racket.
Jane: Exactly. Exactly.
Kate Linebaugh: How did you tell your husband?
Jane: So I basically had a conversation with him and I told him the story. I even offered him a divorce because since I lost all his retirement, I still have some of mine in my account and I offered him, I say, “If you want, you can take mine.” He was shocked, but he refused divorce. Actually, just through this whole time, he was very supportive and there are moments I want to cry and my heart just breaking, my anxiety was high, but he’s the one telling me, “Calm down. It’s just money. It’s just money.”
Kate Linebaugh: In the end, Jane lost $1.6 million. She says law enforcement told her there’s little they can do to get her money back. How are you doing now?
Jane: It’s been six months now. I’m doing a little better than before. My anxiety level still high, awake middle of night, and my heart aches. It just pain there, even I try to say nothing about it and try to say, “I’m going to be moving forward,” but the thoughts still there. I feel it’s very painful. Very painful. We worked very, very hard our whole life and saved. I’m not a luxury person. I don’t have anything luxury. My husband has clothes wear 10, 15 years, has holes on it, rip on it, he’s still wearing it. It’s not we can’t afford it, we just… it’s a necessity. What’s needed, what you wanted. But we saved for our life just hope we have a secure future, not handing over to a criminal like that.
Kate Linebaugh: Law enforcement officials say if you get a shady text, you should ignore it and don’t transfer money online to someone you’ve never met. If you’ve been targeted by a scam, you can report it to the FBI. Go to the website ic3.gov.
That’s all for today, Wednesday, November 2nd. The Journal is a co-production of Gimlet and the Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We’re out every weekday afternoon. Thanks for listening. See you tomorrow.
