Four Unexpected Insights on Romance Scams

May 22, 2024 by Nasdaq Verafin


Romance scams are among the world’s fastest growing frauds, driven by immense profits for criminals. In 2023, $3.8B was lost to romance scams and other confidence schemes — a number that may even be underreported. With many victims struggling to come forward, financial professionals may be unaware of crucial facts about these schemes that could help them fight back.

Debby Montgomery Johnson, romance scam survivor turned Fraud Awareness & Victim Support Advocate, and Colin Parsons, Verafin’s Head of Fraud Product Strategy, recently hosted an event to help financial institutions answer their questions on romance scams. The conversation was illuminating – and revealed four unexpected insights for financial institutions to consider.

#1: “This Can Happen to Anyone…”: Romance Scams Target All Ages

“It’s actually happening to young folks who are looking for love… it all comes down to being in a vulnerable spot and having access to money.”

Debby Montgomery Johnson, Fraud Awareness & Victim Support Advocate

A common assumption is that romance scammers exclusively target seniors, but those aged 18-59 are 13% more likely to report losses from romance scams. Moreover, financially-motivated sextortion is a growing trend affecting younger people, with reports to the FBI increasing 20% from October 2022 to March 2023. Criminals are not concerned with demographics – money is their only objective, and any individual is at risk.

#2 Victims Can Face Legal Consequences

Romance scam victims may be exploited as money mules, moving illicit funds without realizing they are laundering the profits of other crimes. Witting or unwitting, the victim may be held liable by law enforcement for aiding and abetting financial crimes. This is especially true when a victim has been warned that their actions may be connected to nefarious activity. They can be considered complicit in the crime, while the criminals may escape without consequence – often residing outside the jurisdiction of authorities.

#3: Customer Behavior is a Crucial Indicator

“I had never done a wire transfer in 52 years, except for a real estate transaction. Suddenly, I was coming in every other week or two to wire increasing amounts, $5,000 or $10,000.”

Debby Montgomery Johnson, Fraud Awareness & Victim Support Advocate

In a romance scam, victims may be wholly convinced that their relationship with the fraudster is real. As the scam progresses and the fraudster increases their demands, the victim may make uncharacteristic financial decisions, such as using lines of credit or pulling from investments.

Remaining vigilant and monitoring for these changes in behavior is key to identifying the scam and intervening to prevent further exploitation. Financial institutions should attend to signs of unusual behavior at the frontline, such as a customer mentioning an overseas relationship with an individual they have never met, and use tactful inquiry to determine if the customer may be victim. Victims may also attempt to send large payments using wires — a transaction channel that is often irrevocable. To detect potentially suspicious transactions, financial institutions should implement fraud controls that consider whether a payment is unusual for a particular customer.

#4: Financial Institutions Can Help Victims Regain their Financial Future

“You have a big part in helping the victim gain some control back, gain some power back with their finances. It starts with you, the front lines and the backlines, working together.”

Debby Montgomery Johnson, Fraud Awareness & Victim Support Advocate

Romance scammers often will not relent until their victims have nothing more to give, leaving them to face an uncertain financial future with little more than depleted accounts, lines of credit, and credit cards debt. Financial institutions have an essential role in helping survivors reclaim their financial future by supporting a victim’s re-entry to the banking system, allowing them to rebuild their credit scores and savings.

An Industry-Level Challenge

Romance scams are complex — from their victimology to their devastating financial, emotional, and legal consequences for survivors. As the scale of this threat deepens, so must our commitment as an industry to take decisive action.

For further insights, watch our archived webinar, Romance & Relationship Fraud: Experts Answer Your Questions to learn more about protecting your customers.

Nasdaq Verafin provides cloud-based Financial Crime Management Technology solutions for Fraud Detection, AML/CFT Compliance, High-Risk Customer Management, Sanctions Screening and Management, and Information Sharing. More than 2,500 financial institutions globally, representing more than $8T in collective assets, use Nasdaq Verafin to prevent fraud and strengthen AML/CFT efforts. Leveraging our unique consortium data approach in targeted analytics with artificial intelligence and machine learning, Nasdaq Verafin significantly reduces false positive alerts and delivers context-rich insights to fight financial crime more efficiently and effectively. To learn how Nasdaq Verafin can help your institution fight fraud and money laundering, call 1-877-368-9986.