Scam Texts Yield Billion-Dollar Bonanza for Chinese Criminals
The world of text message scams marked an unwelcome milestone last month.
On a single day in September, Americans reported a record 330,000 scam messages related to unpaid toll fees. That’s according to a report late Tuesday (Oct. 15) by the Wall Street Journal (WSJ), which notes the overall scam text business has become a $1 billion source of income for Chinese criminal gangs.
The problem is ballooning, the WSJ said, citing information from Proofpoint, a cybersecurity company that filters mobile spam messages. Data shows the average monthly volume of toll-scam messages increasing more than three-fold since January 2024.
These texts, the report added, are designed to trick victims into sharing credit card information, letting gangs use those details to purchase iPhones, gift cards, clothing and cosmetics. The scammers are able to add stolen card numbers to digital wallets in Asia, then share the cards with the people in the U.S. making purchases.
Fueling these operations are “SIM farms,” the report added, or rooms filled with boxes of networking devices.
“One person in a room with a SIM farm can send out the number of text messages that 1,000 phone numbers could send out,” said Adam Parks, an assistant special agent in charge at Homeland Security Investigations, the investigative division of DHS.
He also noted that the scammers use remote tap-to-pay software to build “a virtual bridge between the phone in China and a phone in the United States.”
The report comes in the wake of data released last month by the Department of the Treasury showing a 66% year-over-year increase in cyberscams that originated in Southeast Asia last year, costing Americans $10 billion.
The department’s Office of Foreign Assets Control (OFAC) had just issued sanctions against “a large network of scam centers” in the region, as it said in a news release. This included nine targets in Shwe Kokko, Myanmar, “a notorious hub for virtual currency investment scams under the protection of the OFAC-designated Karen National Army.”
Research by PYMNTS Intelligence has found that scams were the number one form of fraud last year, ahead of digital payment fraud, and now account for 27% of banks’ fraud losses.
The share of scam-related fraud rose by 56%, with financial losses from scams jumping 121%, the research showed.
“Scams now account for 23% of all fraudulent transactions, with relationship/trust and product/service scams responsible for most losses,” PYMNTS wrote late last year.
“These scams manipulate individuals into authorizing fraudulent transactions, often using deceptive tactics. Additionally, fraud involving compromised credentials, where individuals are tricked into revealing account details, is also on the rise.”
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