The vast and sophisticated global enterprise that is Scam Inc

Edgar met Rita on LinkedIn. He worked for a Canadian software company, she was from Singapore and was with a large consultancy. They were just friends, but they chatted online all the time. One day Rita offered to teach him how to trade crypto. With her help, he made good money. So he raised his stake. However, after Edgar tried to cash out, it became clear that the crypto-trading site was a fake and that he had lost $78,000. Rita, it turned out, was a trafficked Filipina held prisoner in a compound in Myanmar.

In their different ways, Edgar and Rita were both victims of “pig-butchering”, the most lucrative scam in a global industry that steals over $500bn a year from victims all around the world. In “Scam Inc”, our eight-part podcast, The Economist investigates the crime, the criminals and the untold suffering they cause. “Scam Inc” is about the most significant change in transnational organised crime in decades.

Pig-butchering, or sha zhu pan, is Chinese criminal slang. First the scammers build a sty, with fake social-media profiles. Then they pick the pig, by identifying a target; raise the pig, by spending weeks or months building trust; cut the pig, by tempting them to invest; and butcher the pig by squeezing “every last drop of juice” from them, their family and friends.

The industry is growing fast. In Singapore scams have become the most common felony. The UN says that in 2023 the industry employed just under 250,000 people in Cambodia and Myanmar; another estimate puts the number of workers worldwide at 1.5m. In “Scam Inc” we report how a man in Minnesota lost $9.2m and how a bank in rural Kansas collapsed when its chief executive embezzled $47m to invest in crypto, under the tutelage of a fake online woman, called Bella. A part-time pastor, he also stole from his church.

Online scamming compares in size and scope to the illegal drug industry. Except that in many ways it is worse. One reason is that everyone becomes a potential target simply by going about their lives. Among the victims we identify are a neuroscience PhD and even relatives of FBI investigators whose job is to shut scams down. Operating manuals give people like Rita step-by-step instructions on how to manipulate their targets by preying on their emotions. It is a mistake to think romance is the only hook. Scammers target all human frailties: fear, loneliness, greed, grief and boredom.

Another reason scamming is worse than drugs is that the industry is often beyond the reach of the law. In the physical world pig-butchers work from compounds that host production lines of scammers and are a cross between a prison camp and an old-fashioned company town, with supermarkets, brothels and gambling dens—as well as torture chambers for workers who cause trouble. Some of the profits buy protection from politicians and officials. In the Philippines a Chinese national called Alice Guo became the mayor of a small, run-down town and built a scamming complex there with about 30 buildings. Over $400m passed through her bank accounts in 2019-24. In Cambodia, Laos and Myanmar cybercrime is a mainstay of the economy. Scam states are likely to become even harder to deal with than narco states.

The scammers are just as elusive in the online world. The Chinese criminal syndicates running them are not hierarchical mafias. Instead, they form an underground gig economy. One group may specialise in contacting marks, another in coaching them to invest in crypto and a third in laundering their stolen money. The digital fracking of human frailty is highly scalable.

The last reason the scamming is worse than drugs is that it is so innovative. Crooks use advanced malware to harvest sensitive data from victims’ devices. Online marketplaces trade tools and services, including web domains, artificial-intelligence (AI) software and torture instruments. Cryptocurrency enables crooks to move money quickly and anonymously into the real world. Regardless of its merits, the crypto deregulation under way in America will give them fresh opportunities.

AI will turbocharge this innovation. Even today, just 15 seconds of someone’s voice is enough to produce a clone that criminals use for impersonation. An employee in the Hong Kong office of Arup, a British engineering firm, was tricked into paying out $25m by a video call with deepfakes of his colleagues, including the head of finance. By combining voice-changing and face-changing AI with translation services and torrents of stolen data sold on underground markets, scammers will be able to target more victims in more places. Criminals will also be able to use analytics to search through large data sets for wealthy, lonely or troubled people who make promising targets.

Online scams will be even harder to curb than the drugs trade—and, in contrast with drugs, the option of legalisation, regulation and treatment is not available. Education may help. In Singapore warnings pop up on public transport and during online transactions. But policing must also change.

To fight the scammers, the authorities must create networks of their own. Today too many police forces that devote huge resources to combating the drugs trade treat scamming as a nuisance and victims as dupes. Instead they need to work with banks, crypto exchanges, internet-service providers, telecoms companies, social-media platforms and e-commerce firms. Singapore has established a nerve centre where police, banks and e-commerce firms can track and freeze money in an instant as scammers move loot between accounts.

Spare them from the butcher’s knife

Countries also need to look across their borders. When criminals move money and people through many jurisdictions, global law-enforcement machinery cannot keep up. Many scam bosses are from mainland China and the Chinese Communist Party arrests hundreds of thousands of alleged scammers each year. No country understands the scale and sophistication of the criminal groups better. At a time when America and China are at loggerheads, scamming is one area where they could—and should—work together for the common good.

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