A special committee in the United States Congress has expressed concerns over the escalating threat posed by Asian-origin “romance scam” syndicates targeting Americans. These fraudulent centers swindle over $5 billion from the US annually and are believed to have covert support from the Chinese Communist government.
The latest report from the US-China Economic and Security Review Commission (USCC) reveals that cyber scams targeting Americans increased by 42% in 2024 compared to the previous year. Meanwhile, official Chinese reports claim a 30% decrease in domestic online fraud losses.
In March 2024, a 82-year-old man named Dennis in Virginia fell victim to an online scam, resulting in the loss of his life savings which led to him tragically taking his own life. Dennis had met a woman named “Jessie” on Facebook, who claimed to make money through cryptocurrency investments. After months of chatting, Jessie convinced Dennis to invest his savings in cryptocurrency. One day, Dennis discovered that both his money and Jessie had disappeared.
This type of scam, known as a “romance scam” or “pig killing scam,” involves scammers building emotional relationships with unsuspecting individuals online before deceiving them into making investments.
Experts convened by the United States Peace Institute estimate that in 2023, these scams generated $63.9 billion globally, with Myanmar, Cambodia, and Laos being major hubs for fraudulent activities.
Beijing also exploits the issue of scam centers to extend its influence in Southeast Asia. Reports suggest that scam centers in the Philippines may be linked to espionage activities by Chinese authorities.
According to the USCC report, Beijing pressures Southeast Asian countries under the guise of protecting Chinese victims to allow greater involvement of Chinese security forces in cracking down on scam centers in the region.
When Chinese security forces participate in anti-scam operations in Southeast Asian countries, they often seize a large number of devices used by fraudsters. For instance, in 2023, China participated in operations in Laos and confiscated at least 640 scam-related computers and mobile phones. In August 2024, Chinese forces joined a crackdown in Myanmar, confiscating a “large number” of scammer devices and bringing them back to China.
The USCC highlights that these seized devices may contain critical intelligence related to Chinese criminal networks and highly sensitive personal information of scam victims, including Americans. However, testimony from Jason Tower, director of Myanmar affairs at the US Peace Institute and an expert on transnational Chinese crime, confirmed that Beijing has been reluctant to share information collected from these devices with other countries.
The USCC emphasizes that Beijing takes action against criminal groups that do not conform to its control but often turns a blind eye to criminal groups aligning with its broader agenda.
The report states: “However, these selective enforcement actions have not curtailed the expansion of scam centers in the region but, on the contrary, Beijing’s ‘protecting Chinese victims’ has accelerated the shift of focus of scam centers towards American victims.”
The report points out that initially, these Chinese criminal groups targeted victims within China, but after crackdowns by Chinese authorities, they shifted their focus to English-speaking countries, including the United States.
Beijing’s selective crackdowns on scams targeting Chinese victims led Chinese crime organizations to conclude that targeting citizens of affluent countries like the US can yield higher profits with lower risks.
The expansion of these Chinese crime networks in Southeast Asia aligns with China’s Belt and Road Initiative.
The report states: “Some notorious criminal groups invest heavily in infrastructure projects under the Belt and Road Initiative, aiding in the establishment of physical and digital infrastructures for scam activities in locations like Cambodia and the Thailand-Myanmar border. In turn, Chinese officials and state-owned enterprises support these projects to showcase their progress in advancing the Belt and Road Initiative, even though these projects are associated with transnational crime.”
The USCC warns that the current US efforts to combat telefraud are fragmented and under-resourced. Without coordinated efforts to raise public awareness, enhance law enforcement capabilities, and actively expose and curb scams, US losses are likely to increase further.
The report reveals that the Chinese criminal groups leading these scams are technologically advanced, continuously utilizing various technologies to lure victims and evade detection. Scammers often contact potential victims through social media and dating apps. Upon establishing contact, scammers typically move communication to encrypted messaging services to reduce tracking risks.
An increasing number of fraud activities use translation software, AI chatbots, and deepfake technology. After gaining trust, scammers persuade victims to invest in fraudulent schemes linked to accounts under their control.
Ultimately, scammers utilize money laundering services promoted on encrypted messaging apps to transfer stolen assets to thousands of digital wallets before laundering them into legitimate economic sectors.
Interpol stated in a statement on June 30th that scam centers fueled by human trafficking have expanded their global footprint beyond Southeast Asia to regions including the Middle East, West Africa (emerging as potential new regional centers), and Central America, with a continual rise in the number of online scam centers.