‘Pig Butchering’: The Newest Scam You Should Be Aware Of

March 6, 2024

Scammers and fraudsters work tirelessly to find new ways to separate money from honest people. And this presents a huge risk for businesses as well.

Technology plays a big part in helping scammers, but social engineering remains one of the most effective ways to target both individuals and companies alike. One such scam has been named ‘pig butchering’.

Researchers at the University of Texas released a study where they highlight that at least $75 million in cryptocurrency alone was stolen between 2020 and 2024 using this method. The name sounds gruesome – but the scam is deserving of it.

Pig butchering scams are named after the practice of farmers fattening up their livestock before slaughtering them. The victim is the pig, while the bad actors are the butchers.

If you have ever received a text message from a wrong number, you should know that should the person on the other side continue to engage in conversation after it has been established that it’s a wrong number – it’s a scam. The person on the other side will try to gain your trust over several days, after which they will try to convince you to invest money into a (fake) website or app, and the scammers are so skilled, they can convince people to invest hundreds of thousands – or even millions,  before they catch on.

This is not only happening to the older, less tech savvy generation, as one might think – they are able to target executives, even C-suite representatives from financial institutions. Recently, the CEO of a bank managed to drive the bank to bankruptcy after falling for one such scam in which he lost $50 million.

This highlights the need for education amongst every tier in every company, as well as tools to protect against constantly evolving fraud techniques.

Last week we talked about artificial intelligence (AI) and how it can be used to aid these scammers, as it gives them an edge to seem legitimate in the eyes of an “untrained” individual, not only in pig butchering scams, but also in business email compromise (BCE) attacks – which the FBI estimates has lost businesses $2.4 billion. This scam works a little differently.

(in BCE scams), fraudsters pretend to be a supplier or other authorized party and trick employees into diverting funds to them.

A PYMNTS and Hawk AI collaboration found that one third of Fintech and Bigtech companies have experienced fraud in recent months.

about 43% of FIs in the U.S. experienced an increase in fraud this year relative to 2022, resulting in a rise in fraud losses increasing by about 65% from $2.3 million in 2022 to $3.8 million in 2023.

According to Tobias Schweiger from Hawk AI, Artificial intelligence isn’t reserved for the “good guys” and urges organizations to make sure they have enough technology “on the good side” to fight back.

AI can be used to mimic voices, or create fake images or videos, and this inevitably gives an edge to fraudsters.

(AI) can effectively mimic a voice within three seconds of having recorded data, (fraudsters are) utilizing AI to not just commit attacks, but to become very good at committing these attacks.

So make sure to tell your parents, children, grandparents, employees and employers alike, that the easiest way for a scammer to take their money is not just hacking – but ignorance- one should always be on the lookout for bad intentioned people.

And please, never ever establish a deep connection with a “wrong number”. 

 
 

Want to learn more? Check out PYMNT’s full write-up here.

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