State of Internet Scams 2023

-Scammers Break $12 Billion Barrier for the First-Time Ever-

In 2023, Americans lost a record $12.5 billion to online scams, an increase from $10.3 billion in 2022 and a staggering 362% rise from $2.7 billion six years ago, according to the FBI Internet Crime Complaint Center. The average loss per victim increased from $12,859 per incident in 2022 to $13,647 last year.

Victims of online scams, including investment, romance, cryptocurrency, and others, often lose their life savings, with some tragically taking their own lives. Our analysis revealed that only 4.2% of the lost monetary assets were recovered in 2023.

Social Catfish is releasing its third annual study on the State of Internet Scams 2023. The purpose of this study is to provide a comprehensive and real-time overview to equip people with the knowledge required to avoid becoming victims.

The mission of Social Catfish is to help eradicate online scams using reverse search technology.

Methodology

• We analyzed data released in 2024 by the FBI Internet Crime Complaint Center (IC3) and the Federal Trade Commission (FTC).

• We released proprietary survey results after polling 5,500 romance scam victims in June 2024. The respondents are members of the Social Catfish Facebook group SCF Seekers –  a place for victims who have been scammed out of money.  

Key Findings of the State of Internet Scams 2023

1. Total Reported Money Lost: A record $12.5 billion was lost to online scams in 2023, up from $10.3 billion in 2022. The average loss per victim was $14,198 in 2023, up from $12,859 the previous year.
   
2. 81% of Romance Scam Victims Do Not Come Forward: Similar to previous years, a significant number of victims remain too ashamed to report their incidents. Based on our analysis, we estimate that approximately 81% of romance scam victims did not come forward in 2023.
   
3. Estimated Actual Losses in 2023: Given that many online scam victims are too afraid to come forward, it is estimated that the actual losses were closer to $200 billion in 2023.
   
4. Only 4.3% of Stolen Funds Were Recovered: The FBI IC3 Recovery Asset Team was able to recover $538.39 million, or 4.3%, of the total $12.5 billion lost in 2023. The primary reason is most scams originate from outside the U.S., where law enforcement has no jurisdiction.
   
5. Teens & Children See Largest % Increase in Money Lost: In the last five years, money lost by victims 20 and younger grew significantly. In 2023, victims under 20 lost a total of $312 million, indicating a sharp increase compared to previous years. Seniors remain by far the most victimized group overall, losing $3.8 billion in 2023, but the surge of young victims speaks to the growing sophistication of scammers.

6. Apps Where Most People are Scammed: A poll of 5,500 online scam victims found that most online scams happen on Facebook (32%), Google Hangouts (16%), WhatsApp (16%), Instagram (14%), and Plenty of Fish (16%).
   
7. The Future of Online Scams with Artificial Intelligence: The explosion of AI has given us a glimpse into the future of scams with new tactics such as ‘voice cloning’ and ‘deep fake’ videos making it look and sound like you are giving money to someone you know, trust, or love. It is critical to remain vigilant against these extremely savvy scams.

8. States with the Most Online Scams 2023

9. 20 Most Financially Devastating Scams From 2020-2023: 

10. 20 Most Scammed Countries: The United States Ranks #1

The United States led the world with 521,652 online scam victims in 2023. The United Kingdom, Canada, India, and Nigeria round out the top five.

Why Stolen Funds Largely Cannot be Recovered: Domestic vs. International Law Enforcement Jurisdiction

Last year, the FBI IC3 was only able to recover $538.39 million of the total $12.5 billion lost to online scams. In 2018, the FBI launched the IC3 Recovery Asset Team (RAT) to streamline communication with financial institutions and assist FBI field offices with the freezing of funds for victims who made transfers to domestic accounts under fraudulent pretenses.

RAT only has jurisdiction over scammers operating inside America. In that respect, RAT recovered $538.39 million of the $758.05 million stolen domestically.

The rest of the $12.5 billion was stolen by scammers living internationally. The majority of online scams emanate from Nigeria, where scamming has become a significant business sector in a country where many citizens lack financial opportunities.

The challenges of recovering stolen funds in cybercrimes often revolve around the complexities of domestic and international law enforcement jurisdictions. When a cybercrime transcends international borders, the situation becomes exponentially more complicated due to several key factors:

• Different Legal Frameworks: Each country has its unique legal system and regulations concerning cybercrime, making coordinated efforts difficult.
  
• Lack of Mutual Legal Assistance Treaties (MLATs): Not all countries have agreements that facilitate the sharing of information and cooperation in law enforcement efforts, which is critical in chasing down stolen funds across borders.
  
• Prioritization and Resources: Cybercrimes might not be prioritized equally in all jurisdictions, and some countries may lack the resources to effectively tackle these issues.

These factors contribute significantly to the difficulty of recovering stolen funds once they have been transferred internationally. Domestic recoveries might be more feasible through organizations like the FBI’s IC3 Recovery Asset Team, which collaborates with financial institutions to freeze fraudulent transactions quickly. However, once funds leave the domestic circuit, the complexity and likelihood of successful recovery diminish greatly.

Where Do Online Scams Originate From?

Online scams can originate from virtually anywhere in the world, but there are hotspots where these activities tend to be more concentrated. Based on various reports and law enforcement data, here are some of the common origins:

• Eastern Europe: Countries like Russia and Ukraine have developed reputations for being hubs of sophisticated cybercrime networks. These networks often engage in a variety of criminal activities including malware distribution, phishing attacks, and complex financial frauds. The sophistication of these networks can be attributed to a high level of technical education and a sometimes lax legal environment regarding cybercrimes. Additionally, these countries have been linked to state-sponsored hacking, involving espionage and cyber warfare tactics that target governments, corporations, and infrastructure around the world.
  
• West Africa: In West Africa, particularly in nations like Nigeria and Ghana, there is a notable prevalence of “419” scams, named after the section of the Nigerian Criminal Code which addresses fraud. These scams are often characterized by advance-fee fraud, where victims are persuaded to pay upfront fees for promises of greater rewards that never materialize. Romance scams are also prevalent, where scammers create fake online profiles to gain victims’ trust and affection before soliciting money under false pretenses. The effectiveness of these scams lies in the psychological manipulation and exploitation of victims, often leveraging the promise of love or financial gain to extort money.
  
• South Asia: India and Pakistan have been particularly highlighted for tech support scams and call center fraud. These scams typically involve fraudsters impersonating tech support agents from reputable companies to deceive victims into believing their computers are compromised and urgent action is needed, which usually involves payment for support services that are not needed or legitimate. These scams often leverage the region’s robust call center industry, which provides a large workforce capable of executing English-speaking campaigns at scale. The technical proficiency and the availability of low-cost labor make it a fertile ground for such fraudulent activities.

Scammers often take advantage of countries with lax cybersecurity laws or where economic conditions make cybercrime a more appealing and lucrative career path. Efforts to combat these scams must be global, requiring cooperation across borders and jurisdictions.

Why are America and Other Developed Nations Targeted the Most?

Developed nations are often targeted by cybercriminals due to several attractive factors:

1. High Internet Penetration: Developed countries typically have high rates of internet penetration, with a significant portion of the population having regular, uninterrupted access to the internet. This widespread connectivity not only increases the number of potential victims but also provides a larger attack surface for cybercriminals. More individuals online mean more opportunities for phishing attacks, malware distribution, and other forms of cyber fraud. Additionally, the diverse range of technologies and devices connected to the internet—from smartphones and tablets to IoT devices—expands the variety of tactics and methods available to attackers, making it easier to exploit vulnerabilities at a large scale.
   
2. Wealth and High Consumer Spending: Developed nations often exhibit higher levels of disposable income and consumer spending compared to developing countries. This economic advantage makes individuals in these regions lucrative targets for cybercriminals. With more money to spend online, residents in these countries frequently engage in online transactions, whether for shopping, banking, or investing, thus presenting more opportunities for financial fraud. Cybercriminals target these wealthy individuals with scams such as credit card fraud, investment scams, and ransomware, knowing that the potential payoffs are considerably higher. The promise of tapping into substantial financial resources makes these populations attractive targets for sophisticated fraud schemes.
   
3. Advanced Financial Systems: The financial systems in developed countries are not only sophisticated but also highly integrated, often featuring advanced technologies that facilitate a high volume of digital transactions. While these systems are designed to offer security and convenience, they also present complex challenges in terms of cybersecurity. The very sophistication of these systems can become a vulnerability; as more transactions are processed online, the potential for intercepting these transactions or redirecting funds grows. Cybercriminals exploit this by deploying advanced phishing tactics, creating malware that can bypass security measures, or even leveraging insider threats to access secure financial networks. The continuous evolution of financial technology in these markets also necessitates ongoing adaptation of security measures, which can sometimes lag behind the capabilities of cybercriminals.

The Technology Behind Scams

Modern scams often utilize sophisticated technology to execute and mask their operations. Here’s how:

• Phishing Kits: Phishing kits are pre-packaged sets of resources that help scammers set up phishing attacks without requiring extensive technical knowledge. These kits typically include templates for emails that mimic legitimate companies’ communications, complete with graphics and logos. They also often contain scripts that can be used to harvest login credentials or other personal information from unsuspecting victims. Phishing kits are designed to be easy to deploy and are often sold on the dark web, allowing individuals with minimal technical skills to execute sophisticated-looking phishing campaigns that can be very convincing.
  
• Spoofing Tools: Spoofing tools are technologies that allow scammers to masquerade as another entity, making it appear as though emails, phone calls, or websites come from a legitimate source. These tools can manipulate caller IDs, email headers, and URLs. For example, email spoofing may involve altering the sender’s address to make phishing attempts more credible, while IP spoofing hides the attacker’s real IP address to evade detection and bypass IP-based security measures. Phone spoofing can make calls appear to come from banks, tax authorities, or other trusted organizations, thereby increasing the likelihood of deceiving the recipient into divulging confidential information.
  
• Malware: Malware, which includes software such as ransomware and spyware, is designed to infiltrate and damage computers without the users’ consent. Ransomware encrypts the victim’s data and demands payment for the decryption key. Spyware secretly monitors and collects information about the user’s activities and can log keystrokes, capture passwords, and access files. Malware is typically distributed through malicious downloads, phishing emails, or compromised websites. Once installed, it can perform a range of actions from stealing financial information to locking out users from their systems, often resulting in significant data loss and financial damage.

New Trends in Online Scams for 2024

1. “Phantom Hacker” Scams

A new scam called the “Phantom Hacker” emerged, primarily targeting senior citizens. Scammers impersonate tech support agents, convincing victims that their computers are compromised. They then manipulate the victims into transferring funds to a “secure” account, which is controlled by the scammer. This scam has led to significant financial losses and severe emotional distress for the victims​.

2. Increased Use of Couriers for Cash and Precious Metals

There has been a notable rise in scams where criminals instruct victims to liquidate their assets into cash or buy precious metals like gold and silver. The scammers then arrange for couriers to collect the assets in person. From May to December 2023, this trend resulted in over $55 million in losses.

3. Rise in Cryptocurrency Investment Scams

Cryptocurrency investment scams have surged, with scammers often using social engineering tactics. They build trust through dating apps, social media, and professional networking sites, eventually convincing victims to invest in fraudulent cryptocurrency schemes. Last year, these scams led to over $1.2 billion in losses reported by individuals over 60​.

4. Non-Fungible Token (NFT) Scams

Scammers posing as NFT developers have targeted internet users interested in acquiring NFTs. These fraudsters create fake NFT projects, convincing victims to invest in or purchase non-existent NFTs. This trend has added a new layer of complexity to online scams in 2023​.

5. Impersonation Scams and Tech Support Fraud

Tech support and government impersonation scams have remained prevalent, causing over $1.3 billion in losses. These scams primarily target older adults, who make up 40% of the complainants but account for 58% of the losses. Scammers pose as tech support agents or government officials to gain access to victims’ financial information and steal funds​.

6. Employment and Business Opportunity Scams

False job advertisements linked to labor trafficking and fraudulent business opportunities have been on the rise. These scams often promise high returns or lucrative job offers but end up defrauding victims of their money and sometimes even exploiting them for labor​.

7. Grandparent Scams

Grandparent scams, where criminals impersonate a panicked loved one needing immediate financial assistance, have continued to be a significant issue. In 2023, there were over 200 reports from individuals over 60, with losses amounting to approximately $2.3 million.

8. Sextortion and Romance Scams

Sextortion scams, where scammers threaten to release explicit images unless paid, have also increased. Combined with romance scams, these fraudulent activities have resulted in over $6 million in reported losses from victims over 60 in 2023.

Online Scams and the 2024 Presidential Election

In the context of the 2024 Presidential Election, online scams can significantly impact voter perception and decision-making. Cybercriminals and malicious actors might use misinformation and fake news spread through social media to create confusion or discredit candidates. Here’s how these scams typically unfold:

1. Fake Endorsements: Using deep fake technology to create videos of public figures endorsing candidates or policies falsely.
   
2. Misinformation Campaigns: Spreading false information about voting procedures or candidate positions.
   
3. Donation Scams: Establishing fake campaign fundraising operations to siphon funds from supporters.

These tactics underscore the importance of vigilance and critical thinking, particularly during sensitive political periods. Educating the public about verifying sources and checking the legitimacy of political fundraising requests is crucial to safeguarding the democratic process.

Victims’ Psychological and Emotional Damage

The impact of online scams extends beyond financial loss to significant psychological and emotional distress:

1. Loss of Trust: Victims often experience a deep sense of betrayal, which can lead to difficulty trusting others. This erosion of trust can extend beyond personal relationships, affecting professional interactions and general social engagement, making it challenging for victims to form new relationships or maintain existing ones.
   
2. Stress and Anxiety: The financial instability caused by scams can lead to prolonged stress and anxiety. This constant worry not only affects mental health but can also have physical health implications, such as increased blood pressure and other stress-related conditions.
   
3. Depression: The emotional toll of being scammed can lead to depression, especially if significant sums are lost or if there is public embarrassment. This depression can be debilitating, affecting the victim’s ability to work, interact socially, and perform daily activities, further compounding their isolation and emotional distress.
   
4. Shame and Isolation: Victims might isolate themselves due to shame or fear of judgment from peers. This self-imposed isolation can prevent them from seeking the necessary help or support, exacerbating feelings of loneliness and making recovery even more challenging.

Seeking Support and Recovery

Recovering from an online scam involves more than recouping lost funds; it also requires addressing the psychological aftermath. Here are some steps victims can take:

1. Report the Scam: Contacting law enforcement and reporting to the Federal Trade Commission (FTC) or Internet Crime Complaint Center (IC3) can help authorities track and stop scammers.
   
2. Seek Financial Advice: Consulting with financial experts can help victims understand their options for financial recovery and prevent future incidents.
   
3. Access Emotional Support: Counseling or support groups for scam victims can be invaluable in helping to address feelings of betrayal and rebuilding trust.
   
4. Educate Others: Sharing experiences can empower other potential victims to recognize and avoid similar scams, turning a negative experience into a proactive tool for community awareness.

Where to go if you are an Online Scam Victim

If you fall victim to an online scam, here are some immediate steps you can take:

• Local Law Enforcement: Report to your local police, especially if the scam involves a significant amount of money. Involving law enforcement can also help document the incident, which may be crucial for insurance claims or tax deductions related to the loss.
  
• Internet Crime Complaint Center (IC3): File a complaint online with details of the scam. Providing detailed information can help law enforcement track down the perpetrators and potentially prevent others from falling victim to the same scam.
  
• Federal Trade Commission (FTC): Report the scam to the FTC, which handles consumer complaints and gathers data to prevent future fraud. The FTC also provides resources and guidance on how to recover from fraud and protect yourself from future scams.
  
• Your Bank or Financial Institution: Contact your bank or credit card company to discuss any transactions that need to be contested or security measures that should be put in place. Early intervention can prevent further unauthorized transactions and potentially reverse fraudulent charges.

5 General Tips to Avoid Online Scams in 2023

1. Keep software up to date: Ensure your operating system and applications are on the latest version.
   
2. Use strong, unique passwords for different accounts.
   
3. Enable two-factor authentication wherever possible.
   
4. Be wary of unsolicited emails or messages that request personal information.
   
5. Always verify the authenticity of requests for money, especially if they claim urgency.
   
6. Use reputable security software to protect against malware and viruses.
   
7. Monitor your financial statements regularly for unauthorized transactions.
   
8. Educate yourself about the most common types of online scams.
   
9. Use secure networks, avoiding public Wi-Fi for transactions.
   
10. Backup important data regularly in case of a ransomware attack.

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