The Treasury Department says Americans have lost more than $16.6 billion to an online scam industry largely based in Southeast Asia that targets victims around the world.
Scam centers rely on forced labor, and they proliferated during the pandemic. By some estimates they take in at least $64 billion a year.
The authorities in several countries have been trying to rescue people who were kidnapped and enslaved to work as scammers. But even though the United States and Britain recently imposed sanctions on a Cambodian company accused of running a major scam operation, experts say it will take a lot more work to build cases against the criminal syndicates powering the industry.
Here’s how centers work and why they’re so hard to shut down:
Scammers target victims by winning their trust on social media.
Southeast Asia’s online fraudsters specialize in “pig butchering,” a process in which a scammer builds trust with a victim over weeks or months before asking them to invest in a fraudulent cryptocurrency fund. In that sense they are like farmers fattening pigs for slaughter.
The victim often receives a message from someone posing as a financial adviser on Facebook, WhatsApp or Telegram. Then the scammer instructs the person to transfer money through a website pretending to be a legitimate investment platform. In 2023, the president of a small bank in Kansas did just that, losing about $47 million of the bank’s money to pig butchers.
Fraudsters also use romance scams, in which they cajole people who are divorced or recently widowed to send large sums of money after a brief courtship. Sometimes, they simply call targets on the phone, posing as bank representatives to ask for account details, pin codes and Social Security numbers.
Operators can target victims around the world because they use scammers who are native speakers. Chinese nationals are the largest group trafficked by criminal gangs to Southeast Asian scam compounds, according to Interpol. The facilities also have Brazilians, Indians, Filipinos and people from parts of Africa and Eastern Europe.
Scam centers run on a steady supply of labor and electricity.
Many of the sprawling compounds that house scam operations sit inside special economic zones created by governments in Cambodia, Laos and Myanmar to attract foreign investment. The zones mostly lie along borders with Thailand, giving criminals easy access to that country’s reliable electricity and telecommunications networks.
The operators also use Thai airports and roads to deliver supplies and traffic workers. In many cases, workers are lured to Thailand to take what they think are jobs in customer service or information technology. But after they land in Bangkok, they are taken across Thailand’s porous borders, imprisoned in compounds, and often subjected to physical abuse and torture.
Myanmar’s borderlands are a particularly fertile spot for these centers. The country is in the middle of a civil war. Independent experts say the Myanmar military and armed ethnic groups provide protection in exchange for a cut of the profits. The military government has denied any involvement with the scam groups, saying it was “actively” working against them.
These multistory compounds are in Myanmar towns that sit flush against the banks of a narrow river marking the border with Thailand — so close that you can hear the hum of generators from the Thai side. From the outside, they look like ordinary office buildings and condominiums.
Governments are trying to crack down on scam operators.
Several countries are trying to crack down on scam centers.
This year, China, India and South Korea sent flights to repatriate hundreds of people freed from compounds in Myanmar. A court in China sentenced 11 people to death after convicting them of running an illegal gambling and scam ring there. And Thailand cut power and telecommunication lines to one of Myanmar’s largest scam compounds.
Myanmar’s ruling military government said this month that it had raided a large scam compound, and SpaceX said it had disabled more than 2,500 Starlink devices that power many of the online fraud operations there.
Separately, the American and British governments recently imposed sanctions on a Cambodian company accused of running a major scam operation. South Korea raised concerns about its citizens who had disappeared into Cambodian scam centers, and a top official in Thailand resigned over allegations of bribery related to cybercrime in Cambodia.
But these actions will probably not dent the profits of an industry that brings in an about $64 billion each year, said Jason Tower, a senior expert at the Global Initiative Against Transnational Organized Crime, an advocacy group based in Geneva.
One sign of that: Even in the middle of a mass crackdown by the Chinese authorities in February, construction on scam compounds in Myanmar continued.
Dismantling the scam industry will require coordinated international efforts.
Investigators must share more financial data and information that they gather from rescued scammers, Mr. Tower said.
But pinning down the money trail is difficult because the profits are laundered through luxury properties and encrypted Bitcoin wallets. They also find footholds in countries across Africa and South Asia where organized crime and corruption have weakened governance.
For now, Mr. Tower said, investigators are moving too slowly and the scam centers they target are too lucrative — and too easy to set up — to be stopped.
Francesca Regalado is a Times reporter covering breaking news.
The post Americans Have Lost Billions to Online Scams. How Is That Possible? appeared first on New York Times.
