Romance scams are among the most devastating types of consumer fraud, causing victims significant financial and emotional loss. According to the Federal Trade Commission, Americans lose more than $1 billion each year to romance scams. But the emotional toll, including embarrassment and shame, is what keeps many victims from reporting their losses.
These scams don't start with a hack or a phishing email. They typically begin with a conversation, a message on a dating app or a friend request on social media. Scammers spend time establishing an emotional connection with their target.
It Starts With a Conversation, but the Red Flags Are There
Credit unions are on the lookout for signs that a romance scam could be in play. There are many signs that staff recognize as a potential romance scam in action – a member sending multiple wire transfers in a matter of days, making a very large gift card purchase or urgently wanting to know how to buy Bitcoin or other cryptocurrency. These may all be legitimate transactions, or they could be signals of more nefarious activities in progress.
By the time a member walks in the door to make a questionable transaction, their mindset is not concerned with "this could be a scam" or "I should check this out." Most frequently, the mindset is "I'm helping someone who loves and needs me."
Even when credit union staff recognize what may be going on, their next steps are critical and must be handled delicately to avoid offending or embarrassing the victim. While every intent is to protect members from making a damaging next step, it requires a savvy team member to take the steps to prevent fraud while retaining member dignity. It is difficult to tell an innocent victim they are being scammed when they think they are in love.
Romance scam victims come in all forms – young, old, high earners, living on fixed incomes, students, executives, retirees, any race, any ethnicity and living in any region of the country. Being smart or financially literate doesn't protect you from this crime because these scammers don't prey on ignorance, they prey on human emotion.
Credit Unions Are Perfectly Positioned to Help
Education is the key component to preventing this type of fraud before it begins. Investment in training and education of both members and staff will help in the detection and prevention of romance scams.
Educating members to identify common red flags can help them avoid falling for scams, including the following signals:
- Someone you've never met in person is moving very fast emotionally.
- There is always an excuse for why they can't video chat or meet.
- They are eager to move the conversation to a private messaging app.
- There's a sudden emergency; they need money right away – for medical bills or emergency travel arrangements, or there's an urgent investment opportunity that must be done today.
The most effective thing we can tell members is to pause for at least 24 hours before sending money to someone you've only known online. Talk to a friend, your family or a financial advisor. That delay can break the chaotic emotional state that scammers rely on.
There are many ways that credit unions can educate members, including:
- Adding a quick fraud tip to monthly statements;
- Running social media campaigns;
- Playing a short informational video in the branch lobby;
- Training staff to have these conversations when they spot unusual activity; and
- Creating a one-sheet members can be given at the wire transfer desk or teller stations.
The key is making these discussions normal and ongoing.
When the Worst Has Already Happened
How credit unions respond once a member reports a romance scam matters just as much as prevention. Victims of these scams feel humiliated and blame themselves. Unfortunately, that shame can keep them from reporting what happened or from working with their credit union to try to recover their money. The credit union's response should be supportive, not judgmental.
The following actions should be taken when a romance scam is identified:
- Immediately stop any pending payments;
- Report the fraudulent activity to their financial institution;
- Document everything: Every message, every transaction;
- File reports with law enforcement; and
- Look into recovery options through payment networks or the recipient's bank.
With the right education, solid staff training and clear protocols for how to intervene, credit unions can reduce losses while reinforcing to members the credit union difference.
Victims are targets of incredibly sophisticated psychological manipulation. The words we choose matter and can be the difference between a member who works with their credit union to fight back and one who doesn't report due to embarrassment.
The Role of Credit Unions
Romance scams may prey on emotion, but they are financial crimes — and credit unions are equipped to address both realities. Through strong systems and safeguards, they protect members' money and through human connection, they protect members themselves. In a fraud landscape that is increasingly automated and impersonal, that human element remains the credit union difference. When members trust their credit union, they are more likely to speak up, seek help and avoid the financial loss and personal shame that often accompany romance scams.
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