Online safety:
How not to get scammed
While apparently stationed in South Korea, US soldier “Ryan” spent 16 months flattering and seducing Belinda Ann Frantzen before he began asking her for favours. By then, the mother-of-three believed herself to be in a committed relationship with the uniformed man she had met on a dating website in December 2015. Ryan wanted to include her in his future as he prepared to retire, he said. He had served his country for 20 years and was owed more than $2 million in superannuation.
So far this story reads like an obvious scam. Cybercriminals are known to favour military personnel when creating fake personas because it lends them credibility and provides a handy excuse for why they can’t meet their victim. But Ryan didn’t ask Belinda to send him money, nor did he direct her to a shady cryptocurrency investment opportunity. In fact, he gave her $2 million, paying it into an account he asked her to open, so they could begin working towards their shared dream of opening a restaurant in Turkey.
Under his instruction, Belinda then transferred the money to several different foreign accounts to pay for equipment and decor for their restaurant. She wasn’t spending a cent of her own money, so what was the harm? Well, the river of cash flowing through Belinda’s bank account attracted the attention of Queensland Police’s Financial and Cyber Crime Group, and in October last year Belinda was jailed for money laundering. “Ryan” vanished.
Shattered and heartbroken
“The internet’s opened up so many ways for people to connect, but unfortunately it has also opened up ways for organised criminals to find targets,” says Detective Sergeant Karen McAteer of the aforementioned Financial and Cyber Crime Group. She’s seen many men and women unwittingly become the conduit for stolen cash and sometimes goods.
Even after the police had executed a search warrant on Belinda’s home, she asked them if “Ryan” wanted to meet her. When the judge handed down her sentence, Belinda wailed.
“I hate these ones, because not only does the person lose money, they have their hearts broken and their trust shattered,” says Det Sgt McAteer. “Even when we tell them this person’s a scammer, they’re still looking for that bit of hope that it is real.”
The money laundering romance con is one of many iterations of the constantly evolving cybercrime threat that grew to record levels during the pandemic. In 2018-2019, Kiwis lost $4.1 million to romance scams and you don’t need to be on a dating app to be targeted. Scammers will infiltrate any platform that gives them an opportunity to make a connection.
“Have you heard of the app Words with Friends?” Det Sgt McAteer says. “It’s like a Scrabble app. You think that you’re just playing a game, then someone asks to play against you and they start chatting, and all of a sudden you find you’ve got so much in common …”
Once a criminal makes contact with someone, they will assess how best to exploit the relationship. If the victim has money, they may be targeted for the common romance scam in which their online “partner” suddenly needs to borrow some cash for an emergency. If the victim is skint, the scammer may use them to launder money. In some cases, the criminal will leverage the trust they’ve created to direct the victim to an investment scam. This is called romance baiting.
“There seems to be a convergence between the relationship scam and investment fraud,” says David Lacey, managing director of IDCARE, the national non-profit cyber support organisation. “So if the relationship doesn’t go in the direction the scammer wants, they’ll introduce these investment opportunities.”
While romance scams flourished during lockdown, investment scams caused the most financial damage. New Zealanders lost $19 million in fake investment opportunities in 2020. Those on the frontline say criminal syndicates adapt their tactics depending on what is in the news, so cryptocurrency has also been a growth area for scammers.
“Twelve months ago, Bitcoin was [worth] $13,000, now it’s $72,000,” Dr Lacey says. “So people are seeing that and going, ‘I need to invest in that.’ For scammers, it’s purely about, ‘How do you mirror the market to maximise your deception?’” He has seen people lose their life savings to investment fraud.
As a Chief Information Security Officer for a telecommunications company, Narelle Devine has seen online fraud increase in volume and sophistication over the past five years, but 2020 was the worst ever.
“The sheer size of the problem across all platforms, whether it be email, phone or SMS, is quite mind- blowing at the moment,” she explains.
“We need to go back and re-educate everybody out there who touches the internet [about] exactly what this is and how to protect themselves.”
The investment trading hoax
Matt Cole has worked in marketing for 38 years and didn’t consider himself susceptible to online scams, but he got a cruel insight into how devious and intricate investment rorts can be. A Facebook ad promoting currency trading appeared in his feed and he was intrigued. He emailed the company, MottoFX, and soon found himself speaking to a financial adviser named Jason Billinski, who took him to the MottoFX website and explained the process of setting up an account.
“It’s a complete professional website, which has even got an education centre on it with videos, trading, the whole thing,” Matt says. He checked out MottoFX on
a consumer review site, Trustpilot, and saw it was getting lots of five-star reviews. “I’m looking at it and going, ‘Wow, this is legit, great,’” he says.
Before Matt could begin trading, he had to go through a process called Proof of Person, where “basically you have to prove that you’re a legitimate person”. Because he had recently moved cities, there were some discrepancies with his ID documents and MottoFX knocked back his application.
“From a legitimacy point of view, the fact they made it so difficult to set up an account motivated me to want to have it, and it authenticated them in my head,” he says.
Once Matt was set up with MottoFX, he started speaking regularly with Jason, who was “extremely articulate and very good at explaining how the market works”. Jason had a Russian accent, which Matt queried, as he’d been told MottoFX was UK-based.
“He gave me a whole story about how he moved from Russia to the UK,” says Matt. “He took a role in a large agriculture organisation where he was the financial director. He then met an English girl. They got married, had two boys. He sent me pictures.”
Forex Trading is a high-risk, highreward proposition. Matt opened an entry-level account for €250 and Jason would call him every day with a market summary. “I would then see the trades going in and it’s live, right before your eyes,” he says.
Matt went to the next level at €5000 (the level after that was €25,000, then €50,000), but still hadn’t seen any returns. “I said to him, ‘Look, this is major, I haven’t seen any money come back.’ So he actually sent me back money to give me confidence that it was working,” Matt says. “I kept a spreadsheet of all the trades, and at the end of two months, I was [owed] a great deal of money.”
Suddenly there was a “problem” with the bank, and Matt quickly went from being confident and excited to concerned. MottoFX started pressuring him to put in more money so he didn’t lose the money that was in there.
“And I’d say, ‘But I don’t understand.’ I would speak to Jason, and he would put me onto his boss. He and I had a couple of stern conversations. It became excessively stressful.”
Then came a knock at his door. It was the police, who’d been told by the ACCC’s Scamwatch that Matt had potentially fallen victim to a con. Panicking, he checked Trustpilot – MottoFX now had many complaints.
“There were people saying, ‘You have refused to pay me back my money.’ I went and vomited,” he says. Matt did get some of his investment back. “I leveraged the fact that they still thought I had a lot of money,” he says. He told them that, if they gave him back some cash, he would invest it in Bitcoin. When he received a proportion back, he pushed for more. They refused and he told them he knew they were a scam.
“You feel that you’re an idiot,” Matt admits. “I was dreaming that next year I wouldn’t need to work. This would be my income. Then, all of a sudden, you stop dreaming because you realise it’s not a dream, it’s a nightmare.”
The long-term toll
Kiwis stung by investment scams in 2020 lost on average of $6400, but for Matt and others like him, the effects are long-lasting and not just financial. Being conned online can take a huge emotional toll, which is exacerbated by the fact that once you have been duped by one scammer, you will be
targeted again as identities and details are sold on.
“We get people calling us saying, ‘Every time the phone rings, I don’t want to touch it.’ It’s completely ruined their confidence about engaging over the phone,” Dr Lacey says.
“They will keep going until you have no money left,” Det Sgt McAteer says, “and once you’ve been a victim once, they’ll come back as a different identity because they know there’s a chance they’ll get more money out of you.”
On top of this, there’s the risk these groups will try to profit from what they already know about you. “The harvesting of data from breaches alone is a monetary reward for scammers and hackers. There’s a whole industry around it,” Dr Lacey says.
Matt had counselling to help him come to terms with his significant financial loss, but the ongoing harassment made it hard to move on. “They still contact me at least once a fortnight. They don’t stop,” he says. “I can’t tell you how many hundreds and hundreds of emails. I had to take my computer and have it cleaned.”
One particularly nasty trick is that, after a victim has been fleeced by an investment scam, they’re likely to be contacted by an outfit claiming to be able to recover lost money. The MottoFX Trustpilot review page is a case in point. Amid the warnings the company is a scam are links phishing for victims who may be desperate to recoup some of their losses. Some of these businesses have reviews warning that they’re scams, too.
Part of the reason these scams work is that it can be incredibly difficult for banks and law enforcement to recover the lost money. Many financial scams originate in Eastern Europe, while romance scammers seem to be concentrated in West Africa, but the threat is global and once a victim’s money leaves the country, police can’t trace it. Every year the scammers get more sophisticated and more tailored. Narelle Devine says fighting cybercrime is like a game of Whack-A-Mole. As soon as authorities identify one technique, criminals shift to another.
“It’s big business,” Det Sgt McAteer says. “It’s organised crime. They’ll take shifts. That’s why they can keep in touch with you all the time, and they’ll have a script so the next person knows what to say.”
A chameleon threat
When the world locked down, cybercriminals started impersonating companies like Netflix, anticipating which brands victims would be expecting to hear from. They do their research on local providers, Dr Lacey says, and the early deception research is all about misdirection.
“The thing that’s challenging a lot of the professionals in cybercrime is that there’s no ‘slip, slop, slap’. There’s no pithy message that we can get out there. It’s so variable,” Dr Lacey says.
He used to tell people one way to identify a phishing email was to check the domain of the email address, but criminals have since figured out how to craft a credible-looking domain. People can be caught off guard when scammers deviate from the red flags the public has been taught to look for.
“I spoke to one woman and she honestly believed she was saving orphans in Africa,” Det Sgt McAteer says. Instead she was being used to traffic property bought online with stolen credit cards. Another victim Det Sgt McAteer dealt with lost $380,000, including the proceeds from the sale of her home. Her children won’t speak to her after trying to get her to see she was being scammed. “She’s devastated. She’s basically couch surfing until she can get some money to pay people back.”
Cybercrime victims aren’t stupid, Det Sgt McAteer emphasises. They have been targeted by sophisticated organised crime syndicates, and anyone can be caught out. “People will say, ‘I’ve seen other people fall victim to a scam and think, how could you be so stupid? That would never happen to me.’ And then it does.” AWW
Visit netsafe.org.nz to report a scam. Netsafe also provides information, help and support.
Call 0508 638 723.