Don’t Get Spoofed by Pig Butchering

In this article, we would like to address a topic other than investments and the markets. Recently, there has been a new scam in social media that takes advantage of individuals looking for investment advice. The scammer will impersonate a well-known individual in the investment community: Tom Lee, Josh Brown, Cathie Wood, and many others, luring people into WhatsApp groups via targeted advertising. Because it’s a sponsored advertisement, the post can look legitimate. The FBI calls it “spoofing”. But the internet calls it by a more ominous name: “Pig Butchering”.

Unfortunately, because of my algorithms, I get these sponsored advertising pages all the time. I report them to Facebook who seems to remove the pages briefly and then return about a month later. This is what these scams look like. Innocuous with lots of financial jargon that sounds legitimate.

But if you go directly to the page, you can see that the page is managed from China and Nepal and the contact phone number takes you to a WhatsApp group. At this WhatsApp page, the scammers typically feed you a standard stock ticker like the Nvidia post above to “fatten” you up. Then they ask for an investment like a random crypto or perhaps a direct investment. That is when they take your money.

And I know this sounds obvious, but it bears a statement. Tom Lee is never going to DM you. He’s a busy man and doesn’t need to raise funds on Facebook. Furthermore, these types of scams extend to gold bugs, tech support, charities, romance, and the classic “you’ve won $200!” scams from the email days.

A more prominent Pig Butchering scam involves a romantic figure texting the “wrong number”, establishing a relationship with that person, and convincing them to buy gold futures contracts on a fraudulent website that often displays fake winnings and outsized returns which then encourages the victim to invest further deepening the losses. The CFTC outlines such a fraud:

https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CustomerAdvisory_RomanceScam.html

Here is a statement from Josh Brown, prominent figure on CNBC and other podcasts on this very topic and he offers great advice:

https://www.instagram.com/downtownjoshbrown/p/C-sNTBQOM_K/?hl=en

Yet despite warnings from folks like Josh, people continue to get swindled out of their hard-earned assets. This man volunteered his chat log for Pro Publica who did a great story on this. This man originally “invested” $480,000 with his scammer who then convinced him into “investing” another $600,000.

https://www.propublica.org/article/whats-a-pig-butchering-scam-heres-how-to-avoid-falling-victim-to-one

It does not appear that Facebook is going to do anything about these scams and unfortunately, they are all too common. And people need to be aware. So please be vigilant with your savings and do not fall for these scams.

 

This material is for informational or educational purposes only.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

Consult your financial professional before making any investment decision.