Social Media Scams: Con Artists Target the Vulnerable

by Michael B. Joseph, Chapter 13 Standing Trustee (Retired)

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Social media and internet dating sites have given rise to romance and confidence schemes.  Catfishing and spear phishing are extensively used.  Catfishing is faking an identity on the internet. Spear phishing uses more sophisticated and direct messages to trick the victim. New AI programs make it easier to reach and victimize the targets. The fraudsters prey upon the elderly, widowed or divorced men and women. Online profiles are manipulated to include fake photos and biographies. The goal is to exploit the victim who is searching for love and companionship.

A horror story: A debtor who was in a Chapter 13 case had made significant transfers from her savings within one year of filing the petition.  All the transfers were to an offshore bank. It started innocently enough. The scammer built a personal relationship with the victim. They shared intimate details about themselves and their family. The illusion was kept going for 2 to 3 months. They spoke in chat rooms and on the phone for hours at a time. Then the victim was induced to start sending money.  It was too late once she determined she was the victim of a “romance” scam.  The transfers were completed, untraceable, and lost. The bankruptcy trustee investigated the matter and determined recovery of the transfers would be uncollectable.

Recently the Federal Trade Commission, published “Romance Scammers’ Favorite Lies Exposed” Feb, 23, 2023:

“Romance scammers tell all sorts of lies to steal your heart and money, and reports to the FTC show those lies are working. Last year’s romance scam numbers looked a lot like 2021 all over again, and it is not a pretty picture. In 2022, nearly 70,000 people reported a romance scam, and reported losses hit a staggering $1.3 billion. The median reported loss: $4,400. (footnotes omitted)

            Once contact is made, trust is quickly established.  The con artist will then begin to ask the victim for loans of small amounts of money. They ask to send them gift cards. They may gain your personal information and take out credit cards in your name.  Sometimes it is reported the fraudster has the victim take out a home equity loan and gain access to even larger sums of money. They get wire transfers sent to them.  Also, frequently they use payment apps such as PayPal, Zelle, and Venmo. Crypto currency is also used. Since most of the con artists are located overseas with untraceable IP addresses, there is little recourse available to law enforcement to track down the perpetrators and recover the losses.

            “Romance Scams” listed on the current FBI Website states:

Tips for Avoiding Romance Scams:  

  • Be careful what you post and make public online. Scammers can use details shared on social media and dating sites to better understand and target you.
  • Research the person’s photo and profile using online searches to see if the image, name, or details have been used elsewhere.
  • Go slowly and ask lots of questions.
  • Beware if the individual seems too perfect or quickly asks you to leave a dating service or social media site to communicate directly.
  • Beware if the individual attempts to isolate you from friends and family or requests inappropriate photos or financial information that could later be used to extort you.
  • Beware if the individual promises to meet in person but then always comes up with an excuse why he or she can’t. If you have not met the person after a few months, for whatever reason, you have good reason to be suspicious.
  • Never send money to anyone you have only communicated with online or by phone.

Bankruptcy may be a consideration if you or a relative is a victim of this type of scam, leaving the victim with outstanding credit card debts or loans.  It is suggested as follows:

  • Quick action to report the fraud activity is necessary for any chance of recovering any money.
  • A police report should be filed describing the distributions of funds as fraud and theft.
  • Gather all receipts and documents of any distribution to the con artist, include emails, text messages, bank records, credit card receipts and loan papers.
  • File a report and complaint with the bank and/or credit card company involved in the payments and charges and seek any recovery or refund that may be available.
  • File a report with the FTC and any other federal or state government agency that has enforcement powers over consumer fraud.
  • Write a summary of the chronology of the activity, and an explanation of the dissipation of assets.
  • Consult with an attorney to discuss the best options in your specific situation, that may include bankruptcy or other possible actions to recover the assets. Should bankruptcy be an option, consideration of the dates credit cards or cash advances were taken. Be mindful to avoid the time limits in 11 USC Section 523(a)(2)(C) that may render the claims to be nondischargeable. The debtor/victim should wait the 70 or 90 days before filing a petition.
  • If it is a close relative that is the victim of the scam, it is possible you may need legal assistance to prevent further loss of assets. You should seek the assistance of counsel who is experienced in powers of attorney and guardianships. This will be helpful in safeguarding the financial affairs of the victim.

A public education project of the National Association of Chapter Thirteen Trustees

© 2021 BFINE

The materials on this website are for general information purposes only and should not be construed as legal advice, legal opinion, or any other advice on any specific facts or circumstances. You should not act or refrain from acting upon this information without seeking professional advice.