The Love Trap Through Remittances; Realm of “Free” Money!

Historically, con artists have used a variety of tactics to deceive and manipulate their victims, and this include online romance scams. The rise of online dating and social media has made it easier for scammers to create fake profiles and gain the trust of their victims whiles remaining anonymous. The growth in the use of technology and high internet penetration has further exacerbated this menace across the globe.

It is difficult to determine exactly how long these romance scams have been going on, however, the menace have become increasingly prevalent in recent years, with the FBI’s Internet Crime Complaint Centre (IC3) reporting more than $300 million in losses from romance scams in 2020 alone.

According to the Federal Trade Commission (FTC), reported losses from romance scams in 2020 were more than $304 million, up from $201 million in 2019. Research by the Better Business Bureau (BBB) found that romance scams are the costliest type of consumer fraud in the United States. In 2018, victims of romance scams reported a median loss of $2,600, compared to $400 for all types of scams. The FBI’s Internet Crime Complaint Center (IC3) also reported receiving 23,775 complaints of business email compromise (BEC) and email account compromise (EAC) in 2020, resulting in losses of $1.8 billion.

In a 2021 survey of 1,625 US adults by the cybersecurity company NortonLifeLock, 33% of respondents reported being victimized by romance scams, with an average loss of $2,500.

The FTC reported that imposter scams were the second-most reported fraud category in 2020, with losses of $1.2 billion. Imposter scams often involve scammers posing as government officials, family members, or other trusted individuals to trick victims into sending money. It is important to note that these numbers likely underestimate the true extent of romance schemes and fraud, as many victims may not report the crime out of embarrassment or fear of judgement. It is likely that romance schemes will continue to be a problem as long as there are vulnerable individuals who are seeking love and companionships online.

The Fintech industry, innovative payment solutions and remittance companies, remain vulnerable to romance schemes and fraud because they are used by scammers to receive and transfer money obtained from their victims. These scammers may use false identities or impersonate legitimate users to transfer money through remittance companies, making it difficult for these companies to detect and prevent such fraudulent activities. These transactions can be difficult to detect and track, especially if the transfer of funds is conducted through multiple accounts or countries.

Furthermore, remittance companies may be targeted by scammers due to their lax or inadequate security measures, which allow fraudulent activities to go undetected. Scammers may also exploit vulnerabilities in the company’s system or staff to gain access to customer information or perform fraudulent transactions.

Overall, remittance companies need to implement effective measures to detect and prevent romance schemes and fraud, such as identity verification processes, transaction monitoring, and staff training. By adopting the preventive measures stated below, remittance companies can effectively prevent and detect fraud and romance schemes.

Identity verification: Remittance companies need to have a robust identity verification process in place to ensure that each customer’s identification is confirmed before any money transfer takes place. This can include verifying government-issued identification documents, such as passports, driver’s licenses, and national identity cards.

Transaction monitoring and analysis: Remittance companies should implement real-time transaction monitoring and analysis tools to detect any suspicious transactions. This can include identifying transactions that exceed certain thresholds or involve high-risk countries or parties.

Risk assessment and management: Remittance companies should undertake a risk assessment of their operations to identify and evaluate potential vulnerabilities and risks associated with their business. Based on this assessment, the company should implement a risk management framework that includes policies and procedures to mitigate those risks.

Training: Remittance companies should provide training to their staff on how to identify and report suspicious transactions and communicate with customers. Staff should also be educated on the latest industry trends and procedures for addressing fraud and romance scams.

Due Diligence: Remittance companies should conduct due diligence checks on all partners and agents to ensure they comply with established standards of regulatory compliance and best industry practices.

Regular Monitoring: Remittance companies should regularly review and update their fraud and romance scam prevention policies as the threatening phenomenon evolves.

By implementing these measures and continuously monitoring the industry landscape, remittance companies can effectively prevent and mitigate fraud and romance scams and ensure the safety and security of their customers’ transactions and financial data.