Five agencies take on Valentine’s Day romance scams

Dating apps might peak on Valentine’s Day, but they are a gushing sluiceway for frauds known as romance scams. Now they are getting extra attention from five federal agencies, including the Commodity Futures Trading Commission (CFTC). It is a national awareness campaign called, “Dating or Defrauding.” For more on the scams, the Federal Drive with Tom Temin talked with the director of the CFTC’s office of customer education and outreach, Melanie Devoe.

Interview Transcript:  

Tom Temin And I guess my first question is, of all the agencies that there are others, but why the Commodity Futures Trading Commission in an app scam? I would think definitely Consumer Financial Protection Bureau, [Federal Trade Commission (FTC)], which are also involved. Why are you guys?

Melanie Devoe So we’re not the only agency that’s involved in this. As you mentioned, there are several agencies looking at this, including the FBI. But the reason the CFTC is involved is because the fraudsters use cryptocurrency commodities as their pitch to get people to invest. And so the line goes, hey, you can make a ton of money investing in crypto. And hey, my uncle or my aunt or some family relative has some insider information, you’re going to make tons of money. So because there are futures contracts in cryptocurrencies, the CFTC has anti-fraud jurisdiction over our cryptocurrency commodities. Even in the non futures markets. The fraudsters also like to use foreign exchange or Forex as their pitch. And they’ll say hey you can make a ton of money in Forex, which is another product that the CFTC has that anti-fraud jurisdiction over. So that’s why the CFTC is involved.

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Tom Temin These types of come ons to invest in cryptocurrency or forex or whatever it might be. These tend to come, I guess, later on in the encounter that someone has on a dating app. In other words, don’t they spend time, I’ve never been on one, so I don’t know how they work, but you know, married 40 years, but do they get you in based on the normal functions of a dating app? And then as you get to know that non person that you think is a person on the other end, that’s when they bring on the scams and the investment schemes.

Melanie Devoe That’s absolutely right, Tom. This is a very long confident scam and these people are very patient. So the the quote unquote relationship can build up over weeks, even months before the idea of investing is brought on. So yeah, it’s a very elaborate scam. We actually coined the term and others have used it too. But financial grooming fraud, because of the grooming aspect to this fraud, it’s very devastating for the people who are brought into it.

Tom Temin And the person that is doing the scheming and defrauding could be having a thousand accounts at once going on, and it might even be an artificial intelligence bot. Fair to say?

Melanie Devoe That is fair to say that the person underneath the scam could have thousands of accounts. And we have seen reports in the news that AI is also being used. The CFTC, I don’t believe, has publicly made that claim yet. But with the advance of AI, anything is possible. They can clone your voice. AI can do all these crazy things. So I think, yeah, we have to be cognizant that it could be used in these scams.

Tom Temin And tell us the other agencies and what kind of setup you have. Is it a task force? Is it a memorandum of understanding? What’s going on from a programmatic standpoint, federally?

Melanie Devoe We have formed some informal alliances over this dating or defrauding campaign. It was initially launched in 2022 with a couple of partners. At the time, we had the Consumer Financial Protection Bureau, the Department of Homeland Security, U.S. Immigration and Customs Enforcement, U.S. Postal Inspection Service and others. And now for this most recent campaign, we’ve reached out informally to a bunch of other agencies to let them know that we’re focused on this and to provide them with additional information about what our social media campaigns are doing. In addition to the federal regulators, we’re also talking to state regulators about this issue through there’s an organization called NASAA, that is the North American Securities Administrators Association. We were working with NASAA as well to let them know what we’re doing, and we share our customer advisories with these other agencies.

Tom Temin We were speaking with Melanie Devoe. She’s director of the Office of Customer Education and Outreach at the Commodity Futures Trading Commission. And do we know any idea of the value of the money that might be lost in a given year among people that fall victim to these scams?

Melanie Devoe So the FBI recently came out with one of their spokesman said that in 2023, the total losses reported were $3.5 billion. That’s billion with a B. So this is a lot of money flowing to, unfortunately, on the other side, it’s international organized crime syndicates out of Southeast Asia. That’s a lot of money going from the United States to crime gangs. We coined the term financial grooming gangs just to be a little more specific about who we’re talking to.

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Tom Temin They’re mostly beyond the reach then of federal law enforcement and of the CTFC and of the Consumer Financial Protection Bureau, because they’re just out of reach.

Melanie Devoe So that’s an interesting question, Tom. There are some ways that we can reach these gangs at the CFTC, and we’ve done a bunch of things. My office, the Office of Customer Education and Outreach, is trying to prevent the victimization through raising awareness of the fraud. Our whistleblower office has put out a whistleblower alert, basically trying to encourage people to provide tips if they know about domestic financial grooming fraud activities. If people bring a tip to us and at least a successful law enforcement action, the commission’s allowed to pay the whistleblower 10 to 30% of what we collect. So that’s kind of,  when you’re talking about big sums of money, if someone’s able to bring something that could be a payout, assuming all the other criteria are met. And then finally, our division of enforcement has brought a case in this matter, the matter which we referenced in our press release. So there are things that the domestic agencies can do, because even if the fraud is happening and orchestrated overseas, there are domestic actors who are helping these fraudsters or helping them in a couple of ways. They’re setting up local bank accounts in the United States, and they’re also setting up cryptocurrency accounts with our major cryptocurrency exchanges. So there are definite touch points that domestic agencies can work on here.

Tom Temin It strikes me that someone from the task force and the reliance of agencies could get on to one of these apps and if possible, like string the perpetrator along long enough, almost like the old fashioned of keeping someone on the telephone till they can trace where the phone is located. I’m dating myself, but it seems like you could triangulate in more closely on the perps if you could keep them stringing along and have them thinking that they’re on the cusp of someone sending them a lot of money.

Melanie Devoe That’s an interesting question, Tom. I can’t really comment on what other agencies are doing, but I do want to talk just briefly about when criminals use cryptocurrency, that’s a permanent record that is traceable. So you can trace the movement of money through the crypto currency networks. They do leave a trail when they’re using that crypto. It is an interesting thing that you can trace back. And there have been several recent cases where people have been able to trace the stuff back, even though the crime was committed a while ago. So there are interesting things that the CFTC and other agencies that are working on this can do in this space.

Tom Temin And you’re also having a public outreach program for awareness on the part of consumers of what’s going on, too.

Melanie Devoe Yeah, we are doing public outreach. We’re very fortunate that were willing to invite the CFTC to join us to talk about this important issue. I’m personally going to speak with other federal regulators, I’m actually going to San Francisco today to speak to federal regulators tomorrow. I’ll be mentioning this. And then I’m also going to be speaking to some state regulators next week about this. So we’re definitely, working to bring awareness. We also have a social media campaign that the wonderful people at the Office of Public Affairs at the CFTC have done. So watch out for that on LinkedIn, it’s on Facebook, and I believe it’s on Twitter, which we’re now calling X, I guess. But anyway, they’ve done some very creative things.

Tom Temin And so if someone is looking for information from a federal agency on social media, I guess now they’re adding checkmarks and stars and colored dots and stuff so that you know that’s a legitimate account.

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Melanie Devoe With the CFTC,  that’s a great question. Since I’m not an OPA, that’s probably more of a Donna question. I’m sorry, but we do post from our CFTC official account.

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