Don't Get Fooled! How Pig-butchering Scam Is Taking a Toll on Indian Investors

Apr 02, 2024 / Reading Time: Approx. 7 mins

Listen to Don't Get Fooled! How Pig-butchering Scam Is Taking a Toll on Indian Investors

00:00 00:00

Don't Get Fooled! How Pig-butchering Scam Is Taking a Toll on Indian Investors

The rise of digital platforms in the ever-evolving financial markets has provided individuals worldwide with unprecedented access to trading opportunities. However, with this accessibility comes the looming threat of exploitation by cyber criminals seeking to deceive unsuspecting investors.

The Indian financial industry aiming for innovation has unfortunately become the hunting ground for sophisticated scammers. Among these deceptive tactics, the insidious 'Pig Butchering' scam has emerged as a major threat, swindling innocent investors out of their hard-earned money and causing monumental financial losses.

Have you ever received a call from someone who said they had dialled your number by mistake, and then the person on the other end starts chatting with you and eventually brings up a great investment opportunity?

Or maybe you have received a message on WhatsApp or SMS promising an easy way to make money?

Even if you haven't received such communication yet, be aware you might receive it in the future. Pig-butchering is the latest addition to the long list of cyber frauds, and it has become a concern for law enforcement agencies across the world. In India, the scale of pig butchering scams is estimated to run into tens of thousands of crores.

[Read: Beware of Bad Advice, Financial Frauds And Mis-selling of Investments]

What Is a Pig-butchering Scam?

A Pig-butchering scam, also known as a 'sha zhu pan' scam, is a type of online investment fraud that involves scammers creating fake online personas to lure victims into fraudulent investment schemes. The term "pig butchering" comes from the scammers' practice of "fattening up" their victims by building trust over time before 'slaughtering' them and stealing their money.

A 'pig butchering' scam involves a fraudster posing as a friend or romantic interest to deceive individuals into providing funds for fictitious investments, employment opportunities, and other schemes, only to abscond with the money afterwards.

As its name suggests, a pig butchering scam entails luring the victim into a false sense of security before exploiting them. Scammers employ fake profiles to build trust, often feigning affection and companionship to manipulate victims into sending money for fake job offers and high-yield investments, ultimately absconding with the funds.

[Read: Digital Loan Scams: Here's How You Can Avoid Them]

The Pig-butchering scams originated in China in 2020 and later spread to several other Asian countries, and they have become widely recognised. These scams have a worldwide reach and inflict significant financial losses on unsuspecting individuals.

Amid rising cases of China's loan app scam, Nithin Kamath, co-founder and chief executive officer (CEO) of online brokerage firm Zerodha, did inform investors about the new wave of fraudulent phishing websites that mimic Indian brokerages to dupe investors.

Nithin Kamath, in a post on 'X' (formerly known as Twitter) in November 2023 last year, emphasised the staggering scope and the vulnerability of countless individuals to fake job offers, fraudulent investment schemes, and cryptocurrency scams.

Here are a few true stories and examples of Pig-butchering scams:

1. A news source claims that the 'pig-butchering' scam ensnared a Philadelphia-based Indian tech professional, Shreya Datta, in a disastrous cryptocurrency romance scam that resulted in a loss of USD 450,000 (about INR 4 crore) and left her heavily indebted. Datta felt mentally violated by this elaborate plan that included clever scripting and deepfake videos.

2. Rakesh Bedi, a veteran Bollywood actor, fell prey to cyber theft and was later scammed for Rs 85,000 by someone posing as an Indian Army official. The actor notified the authorities as soon as he realised, he was being tricked.

Fraudster identified himself as Aditya Kumar, an officer in the Army. In a formal complaint, the actor said that on December 25, the impostor contacted him and asked for pictures and information about his flat, which he was interested in buying.

The scammer informed the actor that he would be paying the Rs 50,000 token and also convinced Bedi to transfer Rs 50,000. According to the accused, the balances of the sender's and receiver's bank accounts had to match since it was an Army account.

[Read: How to Avoid Personal Loan Scams And Protect Your Finances]

3. The group chat technique has been the most prevalent scam tactic in recent times. Once chat groups are full of people talking about investments, scammers can quickly gauge how interested their targets are in investing. The people who stay in the group are probably interested in investing, which makes them prime targets for scams.

Scammers fabricate bogus profiles of certain group chat participants in order to lend the group an air of legitimacy. This strategy simplifies the scamming process and enables fraudsters to focus their attention on individuals who are more likely to become victims of their counterfeit schemes.

Furthermore, it creates a feeling of social approval and community when potential victims watch others having investing discussions without being suspicious of possible scams.

[Read: What is Identity Theft, and How Can You Protect Yourself from Financial Frauds?]

Warning Signs of Pig-butchering Scams...

In her social media posts, Cyber Psychologist and TEDx speaker Nirali Bhatia says that fraudsters use social engineering skills to lure victims. According to her, "they would have done homework and research on you, your likes and dislikes, and know where you work, what your social media footprint is, and all of that."

"The first red flag should go up when a complete stranger starts saying things that align perfectly with your likes, dislikes, and views. One should have no faith in the internet and should consider all options until they are absolutely certain."

Since they have a lot of information on the victims, they make their pitch to earn your trust. She warns investors, saying, "Let's use our common sense", adding that before providing your information, suspicious calls should be cross-questioned to see whether they are genuine or recognised sources.

How to Safeguard Yourself As an Investor from Scams

  • Refrain from responding to unknown messages on WhatsApp, social media, and dating apps, and be cautious of requests to download apps or click on unknown links

  • Be wary of emotional manipulation and avoid making impulsive financial decisions

  • Such scams rely on exploiting your emotions like hopes, fears, dreams, and greed. One must stay calm and avoid reacting hastily to enticing offers

  • When in doubt, go to the nearest police station or seek assistance from legal professionals

  • Be cautious of promises regarding job offers or high returns, and never share sensitive personal or financial information like PAN & Aadhaar number, passport, bank details, etc.

  • If anything sounds too good to be true or creates doubt in your mind, get your guard up and handle the situation prudently. If you are unsure about the source or other party, avoid continuing further.

[Read: 7 Ways to Protect Your Financial Data from Fintech Frauds]

India's rapid digital adoption has created a vast pool of potential targets for online scams. With millions gaining access to the internet and smartphones for the first time, many lack the necessary digital literacy to identify and avoid online threats.

Financial literacy campaigns and educational initiatives can empower potential investors with the knowledge to identify red flags and make informed investment decisions. Inform your family and close ones about this fraudulent scheme - it's possible that this could protect them from financial loss, plus the inevitable psychological trauma resulting from such deep deception.

Remember, if an investment opportunity promises guaranteed, exceptionally high returns, it's likely a scam. Legitimate investments involve inherent risks, and returns are never guaranteed.

[Read: 9 Simple Tips to Protect Yourself from UPI Frauds]

To conclude...

Pig-butchering scams represent a significant threat to the financial security and well-being of Indian investors. By exploiting emotional vulnerabilities and capitalising on the nation's growing digital landscape, these scams have inflicted substantial losses.

However, there is hope. Through a combination of investor education, social media vigilance, regulatory action, and individual awareness, we can dismantle these manipulative schemes and combat this financial menace.

Always prioritise thorough research and prioritise legitimate investment platforms before investing your hard-earned money. Don't let the allure of quick riches cloud your judgment. By fostering a culture of digital vigilance, we can collectively safeguard India's financial landscape from the manipulative tactics of pig-butchering scams.

We are on Telegram! Join thousands of like-minded investors and our editors right now.

MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.
She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.


Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

Add Comments