‘Pig Butchering' Scams: What They Are and How to Avoid Them

Don’t trust that unexpected text or direct message from a stranger—it might be the first step in a “pig butchering” scam. So named in reference to the practice of fattening a pig before slaughter, these scams often involve fraudsters contacting targets seemingly at random, then gaining trust before ultimately manipulating their targets into phony investments and disappearing with the funds.

Pig butchering schemes often start with solicitations of modest investments intended to bolster your confidence. They usually involve some type of fake claim or falsified dashboard that shows assets exponentially growing, with the intent being to encourage larger and larger investments.

Such scams have grown dramatically in recent years, with individual investors sometimes losing hundreds of thousands of dollars.

A Slow Build

Here’s how pig butchering investment schemes frequently work: A stranger will contact you out of the blue via text message, on social media or on a messaging application such as WhatsApp or WeChat and attempt to build rapport. They might provide an unusual explanation for why they’re contacting you, such as having found your name in their contacts list, and often have online profiles that include fake but realistic-looking photos intended to pique your interest. They might also come across as wanting to develop a genuine friendship or romantic relationship.

Over the course of days, weeks or even months, the fraudster will send you messages about personal, non-investment-related topics. They might try to foster trust by sending pictures, talking about activities—such as volunteering—to demonstrate good character, or sharing fictitious life details that mirror your own. They might claim to be a widow, a single parent or even a member of the U.S. military living overseas, for example. In the process, the fraudster will also seek to obtain information that they can later use to manipulate you into surrendering your money.

Though these scams can present in different ways, inevitably the scammer will at some point steer the conversation toward investment-related topics, often asking whether you have an investment or crypto account.

Sharpening the Knife

The goals for the next phase of the scheme are twofold: to create the perception that you’ll make money by following the bad actor’s instructions and to ensure that you have the ability to invest into the forthcoming scam.

In one common scenario, for example, a fraudster might share that they have a connection at a reputable financial institution who gives lucrative investment advice and offer to share that advice with you. They might send screenshots of their alleged brokerage account to demonstrate investment gains from the connection’s prior stock picks. After you express a willingness to invest, the bad actor might ask you to verify that your brokerage account has the ability to trade in the relevant security, then provide additional instructions, including the company to invest in, the specific quantity to purchase and a specific price. They’ll typically claim that you need to place an order to buy the stock immediately and might also ask you to send a screenshot proving that you executed the trade.

In another common scenario, the bad actor will dangle riches supposedly made through trading cryptocurrency. After gaining your trust, they’ll encourage you to purchase or transfer cryptocurrency assets using a specific trading platform, which is likely to be fake and controlled by the scammer or their associates.

Other variations of these scams have the same goal: Entice you to put your money toward the “opportunity” they’ve shared.

It’s important to realize that, while you might be executing such trades in your own investment accounts and with your own funds, the fraudster might be manipulating your decision-making in these and other pig butchering scenarios.

The Slaughter

Capitalizing on the relationship they’ve established with you, scammers will point to impressive gains from initial investments and urge you to deposit increasingly larger amounts. Once you do, however, the switch will flip, often leaving you facing devastating losses. The price of a stock that seemed poised to take off might rapidly plummet once the scammer’s market manipulation kicks into high gear. Or the new crypto platform you recently moved your assets into might suddenly become inaccessible.

If you confront the bad actor regarding the losses, they might express empathy and offer to help you recover your money, perhaps attempting to persuade you to invest in another stock. They might cite additional taxes and fees that you must pay before withdrawing your funds, especially if the investment scam involved crypto assets. And sometimes the bad actor will ghost you once the investment goes south.

Watch for Warning Signs

To avoid becoming a victim of a pig butchering type scam, watch for these red flags and know how to protect yourself:

• Unexpected contact: Never respond to unsolicited messages from unknown contacts, even about seemingly benign topics, especially via text message and on encrypted messaging applications.
• Refusal to participate in video chats: If someone you’ve been messaging with consistently declines to interact face-to-face, they likely aren’t the person from the profile photo.
• Request for financial information: Don’t share any personal financial information with individuals you’ve never met in person. If a new virtual friend or romantic connection starts making financial inquiries, put the brakes on the relationship.
• Invitation to invest in specific financial products: Be wary of any unsolicited investment advice or tips, particularly from someone you’ve only spoken to online and even if they suggest you trade through your own account. Always question what a source has to gain from sharing tips with you and whether the transaction fits with your financial goals and investment strategy.
• Unknown or confusing investment opportunity: Carefully evaluate the product, as well as the person and/or company requesting your investment. Along with a basic search, try adding words like “scam” or “fraud” to see what results come up. Consider running recommendations by a third party or an investment professional who has no stake in the investment, and use FINRA BrokerCheck to see if the promoter is a registered investment professional.
• Unfamiliar trading platforms: Do extensive research before moving any money, particularly in an emerging market like cryptocurrency, which has hundreds of exchanges and new avenues for trading continuing to evolve. Who controls the platform? What security measures are in place? How can you withdraw funds if needed? If you don’t know the answers to those questions, don’t put your assets there.
• Exaggerated claims and elevated emotions: Take a closer look at any investment that offers much higher than average returns or is touted as “guaranteed.” Fraudsters will also often use their knowledge about you to appeal to your emotions—something like, “Don’t you want to have money to send your kids to college?”
• Sense of urgency about an upcoming news announcement or share price increase: Remember that insider trading is illegal, and you should never trade in shares of a company on the basis of material, nonpublic information.

Learn more about how to protect your money from fraud and get more insight from the FBI and the Financial Crimes Enforcement Network (FinCEN) on pig butchering schemes involving cryptocurrency.

If you think you’ve been a victim of a pig butchering stock scam, submit a regulatory tip to FINRA. If you think you’ve been the victim of internet fraud, file a report with the FBI’s Internet Crime Complaint Center.