Global Online Fraud Networks Rival Drug Trade in Scale and Sophistication

A vast network of online fraud operations has reached a level of scale and sophistication that now rivals the illegal drug trade, according to The Economist’s new podcast series, Scam Inc. The series explores how cybercriminals are developing increasingly complex schemes to steal billions of dollars, making these crimes more challenging to police and arguing that online fraud has become even more damaging than drug trafficking.

One of the most insidious scams, known as pig butchering (sha zhu pan in Chinese criminal slang), involves criminals building trust with victims over weeks or even months before coercing them into making investments. Once these victims, referred to as ‘pigs,’ have been completely exploited, the scammers take everything, often extending their deception to the victims' families and friends—hence the term ‘butchering the pig.’

The fraud industry is expanding at an alarming rate. In Singapore, scams have become the most frequently reported crime. The UN estimated that nearly 250,000 individuals in Cambodia and Myanmar were engaged in scam operations in 2023, while The Economist cites other estimates suggesting that as many as 1.5 million people worldwide are involved in the sector.

The Scam Inc. podcast highlights several high-profile cases, including that of a Minnesota man who lost $9.2 million and a Kansas bank CEO who embezzled $47 million after being manipulated by an online fraudster posing as a woman named “Bella.” Unlike traditional drug cartels, scam networks operate in a decentralized manner, with criminal groups specializing in different areas such as victim identification, investment coaching, and cryptocurrency money laundering. Many of these scam hubs operate from highly secure compounds, where trafficked workers are forced into fraudulent activities under threats of violence.

In some regions, scamming has become deeply entrenched in the economy. Cambodia, Laos, and Myanmar are among the countries where cybercrime serves as a significant source of income. The Scam Inc. podcast delves into the case of Alice Guo, a Chinese national who ascended to the position of mayor in a small Philippine town and was found to have constructed a scam complex consisting of 30 buildings. Between 2019 and 2024, this operation processed over $400 million.

The series also emphasizes how advancements in technology are making fraud even harder to combat. Criminals are employing advanced malware to extract sensitive data, deepfake AI to impersonate trusted individuals, and cryptocurrency to move illicit funds without detection. In Hong Kong, an employee at the engineering firm Arup was deceived into transferring $25 million after being fooled by a deepfake video featuring his colleagues, including the company’s head of finance. Similarly, just earlier this week, Thai beauty queen Charlotte Austin fell victim to an AI-assisted scam, losing $118,000.

The Economist underscores the struggle governments face in keeping pace with these evolving threats. “To fight the scammers, the authorities must create networks of their own,” the publication states. It criticizes law enforcement agencies that allocate substantial resources to combating drug trafficking while treating scamming as a mere nuisance and dismissing victims as gullible. Instead, it argues that authorities need to collaborate with banks, cryptocurrency exchanges, internet-service providers, telecom companies, social-media platforms, and e-commerce firms to mount an effective response against fraud networks.

The Scam Inc. podcast ultimately contends that international cooperation is crucial to tackling the scamming industry. With many of the masterminds behind these scams originating from mainland China, The Economist suggests that meaningful progress in dismantling these operations will require joint efforts between the United States and China.

By fLEXI tEAM