Know Your Scam: How to Spot, Report, and Avoid Acquaintance Scams

2024-02-07

Main Takeaways

  • Acquaintance scams are those executed by fraudsters who exploit the trust and friendship of unsuspecting victims for monetary gain. 

  • Acquaintance scammers usually ask their target to 1) lend money, 2) make a donation to charity, 3) invest in an insurance plan, or 4) join their multi-level marketing scheme.

  • Have you been scammed by an acquaintance? Report the incident immediately to the relevant law enforcement agency. If your Binance account was involved, please file a report by following the steps in this guide.

Real friends pay you back! Learn all about acquaintance scams and how scammers defraud victims by constructing a false sense of trust.

As highlighted in our previous editions of Know Your Scam, earning a target’s trust is a consistent theme across various scams. We generally advise against trusting strangers to avoid scams, but in reality it is sometimes more easily said than done. 

What if the scammer is someone you know, or feel like you’ve known for ages? You’ve conversed with them extensively, shared personal stories, and possibly even met face-to-face. Ultimately, you trust this person has your best interests at heart. 

This is a common setup for acquaintance fraud. In the eyes of a scammer, gaining someone’s trust by getting close to them on a personal level is their path to a significant payout. In this edition of the Know Your Scam series, we’ll go over the different types of acquaintance scams and how you can identify and avoid falling victim to one. 

Learn more about crypto scams in our full series of articles here

Four Types of Acquaintance Scams

Acquaintance scams can play out in numerous ways. Fraudsters using this approach may ask their targets to lend money, make “charitable donations,” invest in their “insurance plans,” or join their multi-level marketing schemes. What they all have in common, though, is that the request for money is preceded by a prolonged period of relationship-building that leads victims to trusting the scammer as someone they have known for some time.

In the following sections, we’ve provided a short summary of how each approach to extracting money works in practice, along with tips to identify and avoid them.

 1. The borrower 

The most common form of acquaintance fraud: borrowing money and not paying back. Some common pretexts scammers use to deceive people include:

  • Covering the costs for a “serious accident” that requires surgery;

  • Problems with their bank account;

  • Any urgent financial assistance that, allegedly, will be repaid in the future. For example, their car broke down or they need a new phone as soon as possible. 

However, once the scammer receives the money, they either disappear without a trace or may even request another “loan,” fabricating excuses for why they’re unable to repay the initial amount. 

2. Scamming under the guise of charity

Scammers will pose as charities or individuals in need to solicit “donations.” They often craft heart-wrenching stories to evoke sympathy and manipulate victims into donating money. Moreover, the stories are often related to a recent disaster on the news – such as a severe earthquake or a wildfire — to exploit their targets’ heightened willingness to help. 

3. Fake insurance plans

Another form of acquaintance scam is fake insurance plans. After befriending the victim, the scammer will deceive them into investing in an allegedly attractive insurance plan that the new “friend” is certain to be a real bargain. These plans often claim to offer high returns or special benefits, but in reality, are designed to steal your money. 

4. Multi-level marketing schemes

Multi-level marketing schemes (MLMs), also commonly known as pyramid schemes, rely on person-to-person recruitment. Individuals at the higher tiers of the pyramid profit by recruiting more people, who typically have to pay membership fees upon joining. 

Those looking to recruit new members into such schemes normally tout how much money their participants are earning in a short time. In reality, MLM schemes only benefit the people at the top while the others struggle to recoup their initial investment. In many cases, victims end up inviting — and unknowingly scamming — their own friends and relatives into joining the MLM scheme. Your real acquaintances might also be inviting you into an MLM scheme without even knowing that it’s a scam. 

Learn more about crypto scams in our full series of articles here

How to Identify and Avoid Acquaintance Scams

If you want to avoid falling victim to acquaintance scams, here are several red flags to look out for and best practice tips to follow. 

1. Think twice before you lend money

Always evaluate any requests for money thoroughly. Consider the borrowers’ reasons and ability to pay you back. Assess your own financial situation before you lend money. If you’ve already lent someone money, be especially cautious of repeat and excessive requests for more. 

Ideally, you should document any loan with a legally-binding contract that details the total amount and repayment plan. This helps protect both parties in case of disputes. If you do decide to lend someone money, only give an amount you can afford to lose. 

2. Only make donations to reputable charities

Confirm the charity's legitimacy by verifying their legal registration before donating. Giving to reputable charities ensures your money is used responsibly and for the intended purpose. Be cautious of individuals soliciting donations from you via direct message or social media. It’s always best to make your donations through a charity’s official channels, such as their website. 

3. Avoid shady insurance plans

Be skeptical of excessively attractive insurance terms or unusually low premiums. You can do a quick check by comparing plans with those of trusted insurance companies in your region. If the terms and premiums are drastically different, it’s best you proceed with caution.

Research the insurance company’s background and reputation. Consult other professional insurance brokers or financial advisors if necessary. And before you sign any contract, carefully read through the terms and conditions. 

4. Don’t get coerced into an MLM

Business models that excessively prioritize recruiting new members while neglecting their actual product or service they provide is a serious red flag. Besides promising high returns, MLM recruiters will try to befriend you and build rapport before shifting the conversation to “job opportunities” and how their “companies” are life-changing. 

Always do your research into any job opportunities. Note that while MLM recruiting tactics will seem like a budding friendship, the ultimate goal is to monetize your relationship. Remember, MLM schemes profit by recruiting others. Becoming your friend is the easiest way to deceive you into joining. 

See an Example of Acquaintance Fraud 

A merchant, who we’ll call Mark, meets a new business partner, who we’ll call Jack, in an online community a few months prior. Jack buys cheap goods from Mark’s store and always pays him in full. They transact with each other on multiple occasions without any issues. The two have even met in person on a few occasions.

After a period of inactivity, Jack messages Mark out of the blue. But this time, he’s looking to borrow money instead of making his usual purchase. Jack promises repayment once his “friend gets off work at 17:00.”

Mark transfers 500 USDT to Jack without hesitation. However, Jack disappears once he receives the money. Mark is left confused by the situation, unable to comprehend why a “trusted acquaintance” who had never wronged him before would suddenly steal his money. 

If You’ve Been Scammed by an Acquaintance 

  • Stay calm and alert those close to you. Don't be swayed by emotions, try to stay rational and clear-headed. Let your friends and family know — especially any mutual friends you might have with the scammer — so they don’t get defrauded next. 

  • Disable your accounts. If you’ve provided your personal information to a scammer, freeze your bank and other affected financial accounts immediately, change your passwords, and take other measures to keep your money safe. 

  • Gather evidence. This includes chat logs, loan contracts, payment vouchers, emails, or other communication records. This evidence will help support you when you report the problem to the police or seek legal aid.

  • Report to the police immediately. Provide them with all available evidence and details of the fraud you have suffered. The police will investigate and take appropriate action. Binance works closely with law enforcement agencies worldwide, and our efforts often result in successful arrests and seizures. 

  • Seek legal aid. If your losses are significant or you feel you cannot resolve the issue on your own, consider hiring a lawyer. Explain your situation and provide relevant evidence. Lawyers can provide you with professional legal advice and help you take appropriate legal action.

  • If your Binance account is involved, file a report by following the steps outlined in this guide: How to Report Scams on Binance Support.

We also encourage all users, both new and seasoned, to read through our anti-scam series to better equip themselves against common crypto scams.

Further Reading

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