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Banks seek help to protect customers from online romance scams

“We really need help,” Paul Benda, executive vice president for risk, fraud and cybersecurity at the American Bankers Association, said in an interview with CNBC. “We need social media companies to silence the people who are spreading them. We need law enforcement to be engaged in trying to prosecute some of these people. Unless you put a bad guy behind bars , this guy will continue to do what he does. do.”

Experts estimate that known fraud runs into the billions of dollars each year. Taking into account that many victims don’t report their losses to anyone, overall losses could amount to tens of billions of dollars a year, they say.

Romance scams are carried out by organized criminal gangs, often based in Southeast Asia, who create fake avatars on social media and use them to connect with potential American victims. Their targets are men and women, old and young, people who are highly educated or not, according to experts.

The common theme is loneliness and the desire to engage online. Once a victim responds to the message, the avatar operators embark on a lengthy campaign – often hours of texting each day – designed to persuade the victim that they have fallen in love with a real person. The psychological power of the relationship can take hold surprisingly quickly.

“Some people become addicted within a few weeks,” Benda said. “It’s the really hot glow of a relationship where the texts are constantly coming, all day and all night and they’re hanging on.”

Once this psychological hook is set, the scammer turns the conversations into money. In some cases, they present the victim with a seemingly surefire investment opportunity, or they exploit the victim’s empathy and solicit money for an expensive but bogus medical procedure.

“Some of the scams I’ve heard of involve literally emptying their bank accounts to send the scammer everything they have,” Benda said. “They want to do everything for the person they love…And they’re just mean people taking advantage of vulnerable people.”

Experts CNBC spoke with said social media companies should do more to limit this type of outreach on their platforms and do a better job of weeding out big perpetrators.

They also saw value in regulatory changes that would allow financial institutions to discuss risky customers with each other. Some victims may empty a savings account at an institution to send funds to a fraudster, while the institution that manages their 401(k) retirement account is unaware.

Fraudsters often instruct the victim on how to access and transfer funds. And Benda pointed out that banks find themselves in a difficult position even when they suspect their customers are being defrauded.

“We are legally obligated to give you access to your funds, period. So we can’t stop you from withdrawing from your bank account. Not even if we think…it will destroy your life,” he said. he declares. .

The experience can be emotional, even for bank employees who witness the scam.

“We’ve heard stories where we know a bank teller who’s sobbing…talking to a long-time customer, begging them not to do this stuff, and in the end, no, we have to give them access to their fund.” Benda said.

Banks generally won’t reimburse a customer for losses related to romance scams, Benda explained, because the customer transferred the money willingly. And reimbursing victims would likely only create a market that would attract more scammers.

Erin West, an assistant district attorney in Santa Clara County, California, estimated that between $30 billion and $50 billion was lost to romance scams in 2022.

“It’s an astonishing number. It’s huge,” she said, adding that coming up with an estimate can involve some guesswork since victims may be reluctant to report details of their own financial humiliation.

But West, who is part of a national group of prosecutors trying to shed light on the problem, said the scale of the emotional disaster could be even worse. Discovering these scams can result in the loss of marriages, careers, or a permanent change in financial status.

“I’ve been in law enforcement for 25 years, committing sex crimes and homicides, and I’ve never heard the deep despair you feel when someone realizes that life that he thought he had was completely gone,” she said. “To lose a marriage one day and lose every last penny is traumatic for people.”

West explained that there is a very human reason why single people fall for these scams.

“This kind of crime goes to the very heart of what we want in life. We want to feel loved,” she said. “And we want to have someone to come home to, even if it’s through text, who loves us and understands us and thinks about us. And that’s exactly what they provide.”

“And then they offer a dream where not only can you be loved, but you can also be financially comfortable beyond your wildest dreams,” West said. “It’s easy to call it lust and greed, but in reality, it’s comfort on both levels.”

— Bria Cousins ​​of CNBC contributed to this report.

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