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Banks ask for help protecting customers from online romance scams – CNBC

The banking industry is seeking help from the federal government and the social media industry to stop an escalating crisis that costs Americans billions of dollars each year: online romance fraud.

Such digital crimes have skyrocketed since the pandemic, as criminals reach out to lonely Americans on social media by posing as attractive partners.

“We really need help,” Paul Benda, executive vice president of risk, fraud and cybersecurity at the American Bankers Association, said in an interview with CNBC. “We need social media companies to shut down the people who are putting this information out there. We need law enforcement to get involved and prosecute some of these people. Unless we put the bad guys behind bars. , the guy’s gonna keep doing it. ”

Experts estimate that known fraud cases amount to billions of dollars each year. Considering that many victims do not report their losses to anyone, the total losses could be in the tens of billions of dollars annually.

Romance scams are often run by organized crime groups based in Southeast Asia, who set up fake social media avatars and use them to connect with potential US victims. Experts say their targets include men and women, young and old, highly educated and uneducated.

Common themes are loneliness and a desire to engage online. Once the victim responds to the message, the avatar operator begins a long-term campaign (often several hours of daily text messages) aimed at convincing the victim that they have fallen in love with a real human. . The psychological power of a relationship can take hold surprisingly quickly.

“Some people get hooked within a few weeks,” Benda says. “It’s the real fiery brightness of a relationship where there’s constant email back and forth day and night and they’re obsessed with it.”

Once the psychological hook is set, the scammer turns the conversation into money. In some cases, they may present their victims with investment opportunities that appear certain, or they may prey on their sympathies and demand money for expensive but bogus medical procedures.

“Some of the scams I’ve heard about literally have people drain their bank accounts and send everything they have to the scammers,” Benda said. “They’re willing to do anything for the people they love…and they’re just evil people who take advantage of vulnerable people.”

Experts CNBC spoke to said social media companies should do more to curb this type of activity on their platforms and crack down on large-scale perpetrators.

They also recognized the value of regulatory changes that would allow financial institutions to talk to each other about their customers at risk. Some victims have maxed out their savings account at a financial institution to send money to scammers, while the financial institution servicing their 401(k) retirement account is unaware. There may be.

Scammers often instruct victims on how to access and transfer funds. And Benda noted that banks are in a difficult position even if they suspect their customers are being scammed.

“We have a legal obligation to provide you with access to your funds, so we can’t stop you from withdrawing from your bank account. Even if you think… it’s your life. “It will destroy it,” he said.

The experience can also be emotional for bank employees watching the fraud unfold.

“A bank teller we know spoke to long-time customers, begged them not to do this, and ended up having to give them access to their funds. “I’ve heard stories like that,” Benda said.

Benda said banks generally do not reimburse customers for losses from romance scams because the customers transferred the money of their own free will. And reimbursing victims will likely only create a market that attracts more scammers.

Erin West, assistant district attorney for Santa Clara County, California, estimates that between $30 billion and $50 billion will be lost to romance scams in 2022.

“This is a staggering number. It’s huge,” she said, adding that victims may be reluctant to report the details of their financial humiliation, so some guesswork may be required to arrive at an estimate. Added a cautionary note.

But West, who is part of a national group of prosecutors trying to uncover the problem, said the scale of the psychological devastation could be even worse. When discovered, these scams can lead to the loss of a marriage, loss of a career, or a permanent change in financial status.

“I’ve been in law enforcement for 25 years, and I’ve committed sex crimes and murders, but I’ve never heard of the depth of despair that comes with knowing that the life you thought was over.” What I had was completely gone,” she said. “It’s traumatic for people to one day lose their marriage and lose whatever assets they have left.”

West explained that there are very human reasons why lonely people fall for these scams.

“This type of crime goes to the core of what we want in life. We want to feel loved,” she said. “And we want someone to come home to who loves us and understands us and thinks about us, even if it’s just a text message. And… They offer just that.”

“And they offer the dream that you can not only be loved, but be financially comfortable beyond your wildest dreams,” West said. “It’s easy to call it lust or greed, but what it’s really about is comfort on both levels.”

—CNBC’s Bria Cousins ​​contributed to this report.

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