Looking for love in all the wrong places — dating websites and apps, among other social media, where every year thousands are victims of "sweetheart scams" and someone who seems like a charming potential Valentine can actually be a crime syndicate in Nigeria.
Shockingly, romance scams account for the highest number of internet-facilitated crimes, the FBI says. And they are on the rise.
Confidence fraud — as these schemes are also known — wherein scammers prey on people of any gender, young or old, to defraud them of money, often life savings, occur year-round. However, this deceit is particularly prevalent around Valentine's Day, according to the FBI.
Seniors are the most vulnerable to romance scams, but financial advisors can help prevent them from becoming victims, as identity-theft expert Michael Bruemmer, vice president of data breach resolution at the Experian credit bureau tells ThinkAdvisor in an interview.
The FBI and Federal Trade Commission logged 15,000 romance-scam complaints in 2016, an increase of 2,500 from the previous year. These represent victims defrauded of about $230 million. Only 15% of fraud victims report the crime, so the extent of confidence fraud is likely even higher.
"Sweetheart scammers" steal people's personal and financial information to swindle them out of money. Increasingly, these con artists are sophisticated operations — many organized-crime based — in countries such as Nigeria and North Korea, Bruemmer says.
There are about 3,000 romance websites, including those specializing in cougar dating, interracial dating or big beautiful women (BBW) dating. Approximately 1,000 new sites open every year, according to www.RomanceScams.org, a watchdog and dating-site reviewer.
Scammers defraud trusting types in a host of ways, including bilking men with "mail-order brides." Other con artists lure victims into videotaping themselves nude on Skype, then blackmail them by threatening to post the tapes on Facebook.
States with the most romance-scam victims are California, New York, Texas, Florida and Pennsylvania, the FBI says. One Texas woman, for example, lost $2 million to a sweetheart scammer. It took two years — 2014-2016 — for her negligent financial advisor, noting the client's dwindling account all along, to tell her to contact the FBI.
To make matters worse, organized scammers often post the names of victims on a so-called suckers' list, sharing identification details with other criminals so they can hit on them in the future.
ThinkAdvisor recently interviewed Bruemmer, on the phone from his office in Austin, Texas. He discussed ways that FAs can help protect clients from romance scammers and what to do if one becomes an unfortunate victim. Here are highlights of our conversation:
Is it women who mainly get scammed on dating websites?
No. Romance scams are gender agnostic. There are a lot of scammers behind keyboards posing as young women going after older men. Rarely is the scammer the person they're purporting to be. They create a synthetic, or fake, identity. Cupid is really a devil.
Who are most vulnerable to romance scams?
Seniors living in nursing homes or apartments on their own are the primary targets for romance scammers because they don't get out much [to circulate] and generally have a more trusting attitude. They're out meeting people online.
It's surprising that so many seniors are active on dating sites.
In some locations around the country, the penetration rate of seniors' participation on dating sites is much higher than for people in their 20s.
What are the risks of online dating to seniors who live in nursing homes?
It's amazing how much time some of them spend on computers. We know of someone who was picked up supposedly by a family member — but it wasn't a family member. They were going on a date, but they got into trouble. Another case was almost a kidnapping — the [scammer] tried to shake them down. So it can get very serious.
What's important for a financial advisor to get across to older online romance-seeking clients?
The hardest aspect for seniors is to trust their gut [about meeting people online] because that generation has been brought up to trust and be respectful. But that isn't a good posture online. It's better to trust and verify than to trust and believe. In every problem we've seen, there hasn't been that level of verification because the relationship is always kept secret. People don't want to talk about it. Even after they've been scammed, they're too embarrassed to do so.
How should they "verify?"
They should always get a second opinion about the contact they've made — from a friend, financial advisor, doctor — someone who can give them good independent counsel to help them [validate] that the person is legit.
What should nursing-home residents do when they get involved in an online "romance"?
Speak to [a facility authority] and say, for example: "I'm talking to this person online, and now I find out they're from Romania and want my banking details." Hopefully, they'll be told: "This is crazy. Get off the computer!"
What other factors contribute to seniors' vulnerability to internet dating scams?
Lack of technology competence and savvy. They'll do things that aren't [sensible] from a fraud perspective — and that's not limited to romance scams. They might think it's okay to send their personal identity information — address, phone number, club they belong to — to someone or put it on their Facebook page. They think, "Hey, I want to make myself available." But they don't realize that when they put that information out there, there's no control over it — and it goes everywhere.
Have romance scams perpetrated by big organizations become harder to track now?
