What do pigs and cybercriminals have in common? Beware of ‘Pig Butchering’ Scams

We’ll explain what pig butchering is and how you can avoid it.

By Raghu Valipireddy, SVP, Chief Information Security Officer at Axos Bank

As technology advances, other industries evolve with it. The financial industry is no exception. The rise of cryptocurrencies is a prime example of this evolution. But with each step forward, there are people hoping to profit illicitly.

One of the newer scams cybercriminals are conducting is known as a “pig butchering” scam. It’s as sinister as it sounds.

What is a pig butchering scam?

In this type of scam, bad actors create an online relationship with their victims. This relationship can come from a dating app, chat room, or any other online networking forum. Once contact is made, the scammer attempts to build trust with the victim.

They build trust by first chatting with their mark. Then the perpetrator suggests they consider investing a small amount in a cryptocurrency, with the scammers’ help, of course. Fake returns are created from this small investment to make it seem as if the victim made money. This creates a sense of trust in the victim and empowers them to invest more the next time the scammer asks.

In another variation, the person may create a fake group chat with fake accounts that helps sell the pitch, thus building trust with the victim.

Eventually, the scammer will convince the victim to invest a significant amount in the cryptocurrency and will then walk away with the money, leaving their mark with broken trust and an empty bank account.

It’s called a pig butchering scam because the perpetrator first “feeds” the victim fake returns from the fake investment. Just like a butcher feeds a pig to fatten it before it is slaughtered, the scammer builds a trusting relationship before stealing the money.

How does one avoid the scam?

The best way to avoid a scam of this nature is to catch it before it gets too far. As a rule of thumb, it’s best to be wary of unsolicited investment advice, especially if it was given by someone you only know online.

Another way to avoid the scam is to only invest through certified platforms. Don’t just trust the word of one person online; do your own homework and make the investment yourself. Finally, practice.

If you have been victimized by of one of these scams or suspect a bad actor of running one, report it to the FBI IC3 at www.ic3.gov.

Raghu Valipireddy is SVP, Chief Information Security Officer at Axos Financial, the holding company for Axos Bank, Axos Clearing, and Axos Invest. Axos Bank is a nationwide online bank that provides consumer and business banking products through its low-cost distribution channels and affinity papers.

Raghu holds an MBA with an emphasis in Strategy from the University of Michigan, Stephen M. Ross School of Business. He has been with Axos since 2018.