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Regulation and Compliance > Federal Regulation > FINRA

FINRA Warns of Sixfold Increase in Romance Scams

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What You Need to Know

  • A growing trend in 2021: scammers using romance as a hook to lure people into bogus investments.
  • In the past five years, people have lost $1.3 billion to romance scams, according to the Federal Trade Commission.
  • The largest reported losses to these scams in 2021 were paid in cryptocurrency.

The Financial Industry Regulatory Authority warned late Tuesday in a tweet that those victimized by the “Tinder swindler” are far from alone as losses to romance scams have increased sixfold since 2017, according to a new report from the Federal Trade Commission.

“Remember to be on the alert for signs of fraud before trusting someone with your heart or your money,” FINRA tweeted.

In the past five years, according to the report, people have lost $1.3 billion to romance scams, more than any other FTC fraud category.

Reported losses hit a record $547 million for 2021 — more than six times the reported losses in 2017 and a nearly 80% increase compared to 2020, the report states. The median individual reported loss in 2021 was $2,400.

Scammers create fake profiles online, assume other’s identities, and even contact individuals on dating apps.

Also, “reports of unexpected private messages on social media platforms are common,” the report states.

“More than a third of people who said they lost money to an online romance scam in 2021 said it began on Facebook or Instagram.”

A growing trend in 2021: scammers using romance as a hook to lure people into bogus investments, especially cryptocurrency, the report states.

“People are led to believe their new online companion is a successful investor who, before long, casually offers investment advice,” according to the report. “These so-called investment opportunities often involve foreign exchange (forex) trading or cryptocurrency. And when people follow this investment ‘advice,’ they wind up losing all the money they ‘invest.’”

The largest reported losses to romance scams were paid in cryptocurrency: $139 million last year alone — nearly five times those reported in 2020, and more than 25 times those reported in 2019, the report said.

In 2021, “the median individual reported loss using cryptocurrency was a staggering $9,770,” according to the report. “While cryptocurrency losses were the most costly, it was not the most common payment method for romance scams.”