With the ever-evolving landscape of digital connections, dating apps have turned into a playground for scammers targeting Gen-Zs. These manipulators deploy varied strategies such as the integration of dating profiles with platforms such as Instagram and Snapchat, among others, creating an illusion of authenticity. This type of fraud uses social engineering in combination with counterfeit financial applications and websites to ensnare victims and steal their hard-earned money. While the process may seem tedious and deliberate, it is usually executed on large scales where a scammer may engage multiple victims at the same time, without little to no suspicion as the entire exercise is online.
Experts believe that ‘crypto romance scams’ can be fueled by Gen-Z’s desire for wealth and luxury. “Scammers capitalise on this desire, offering tempting investment opportunities. Creating a sense of urgency or fear of missing out (FOMO), scammers make Gen-Z take swift action in fake cryptocurrency investments. Scammers are expected not to exploit not just vulnerabilities but the very aspirations of Gen Z, of getting heavy returns by investing in cryptocurrency,” Pranav Srivan Elavankovan, founder, Crypfi, told FE-TransformX.
‘Crypto-romance scam’ statistics
As per several media reports, a 66-year-old businesswoman’s pursuit of love led to a crypto romance scam, which left her with a loss of $23 million over four years. This individual tragedy mirrors the broader challenge faced by the Asia Pacific region, witnessing a surge in crypto romance scams that resulted in financial losses exceeding $250 million in 2018 alone, as per insights from Federal Trade Commission (FTC).
In 2021, more than a third of those who reported financial losses due to online romance scams indicated the fraud started on Facebook or Instagram, and more than 55,000 consumers filed a complaint about romance scams. Apart from this older adults reportedly lost nearly $139 million in romance scams in 2020, followed by prizes, sweepstakes, and lottery scams at $69 million, as per insights from a report by the Federal Trade Commission (FTC). Experts believe Gen-Zs can be targeted as they tend to spend more time on dating apps. Around 80% of 18-25-year-olds agree that their self-care is their top priority when dating, and 79% want prospective partners to do the same, as per insights from the South China Morning Post. Scammers are believed to use this idea and lure users to invest in cryptocurrency to make money and invest in self-care.
Crypto-Romance Scam: A Fraud Affair
As the name suggests, ‘Crypto-Romance scams’ refers to a recently developed method, whereby the scammer establishes a romantic relationship with their victims on the internet through dating applications, social media, blog-spots and other virtual spaces, among others. Consequently, these scammers trick such victims into buying and giving cryptocurrency assets to the scammer under the garb of affection. In 2022, there were over 366 million online dating service users. By 2027, it is estimated that there will be 440 million people seeking love through online platforms, as per insights from Statista, a market research platform. “Gen Z users are particularly vulnerable to CryptoRomance scams due to their prevalence on dating apps and social media platforms. Scammers create enticing profiles, initiating romantic conversations to establish a false sense of intimacy. Leveraging emotional manipulation these criminals then coerce Gen Z individuals seeking companionship, into investing in fraudulent cryptocurrency ventures,” Hariom Seth, founder, Tagglabs, explained.
About 40% of online dating app users are from the 25-34 age group. The young audience is highly tech-savvy and is comfortable with digital forms of investing, payments, and fund transfers, as per insights from Statista. Scammers are believed to create fake profiles and contact young people on such platforms to lure them into such schemes promising lucrative returns. “The younger demographic is particularly susceptible to an enhanced level of risk in such scams, due to their increased usage and dependency on their digital lives. A scammer may particularly isolate a young person from their friends and families, amplifying the risk as there is no person from the victim can seek counsel from or otherwise discuss their digital relationship with the scammer,” Abhishek Malhotra, advocate, highlighted.
Breaking up from ‘CryptoRomance scam’
Interestingly, dating apps seem to have recognised this issue, claims to have begun work to curb the same. For instance, in 2022, Tinder launched an education campaign on ‘How to spot a scammer’ with its users in India highlighting the ways to protect oneself online. “ Love is far from the scammer’s mind. The scammer is more focused on fake investment opportunities, pyramid schemes, identity theft, financial fraud, and old-fashioned money transfers. The victim needs to be prepared with promises of love so that psychological triggers such as urgency, fear, greed and other tricks don’t manipulate the victim to doing something that benefits the scammer,” Sajai Singh, Partner, JSA Advocates and Solicitors, added.
Reportedly, after the FTX collapse, the digital asset industry across the world has put a sharp focus on user protection. “Romance scams are one of the many types of scams out there. The main issue here would be education and keeping users informed. We don’t see it as a further deterrent for trading in digital assets but as this can be easily avoided with knowledge and user awareness on our platform and through the media,” Gracy Chen, managing director, Bitget, a crypto copy trading platform, said.
Financial fraud has been a part of modern human history ever since the concept of money and monetary transactions became a part of our daily lives. As the global financial system evolved, the level of financial fraud also changed with time. “By prioritising consumer education, collaborating with local authorities, and upholding transparency and accountability, the digital asset industry can play a pivotal role in combating any scam, safeguarding the well-being of individuals seeking love and financial security in the digital realm,” Manhar Garegrat, country head, India and global partnerships, Liminal, a digital asset custody platform, concluded.
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