Scams made the front cover of the Economist’s Feb 8, 2025 edition titled “Scam Inc”. It claims, “every year US$500bn is stolen in online scams” and now it “rivals the international drugs trade”. The source is an “expert in Chinese organised crime who was a police officer in Hong Kong for 11 years. That puts scamming on a par with the illegal drugs trade as one of the world’s biggest illicit industries”. The source named in the piece is well credentialed but he left the HK Police in 1999. Is the Economists claim that online scams or on a par with drug trafficking really valid? Probably not, or at least not yet, according to available sources.
According to the UNODC cyber enabled fraud proceeds from SE Asian victims & or from SE Asia based criminals generated between US$18 – US$37bn. The GCFFC reported last year on published scam losses for Australia, Canada, Hong Kong, Singapore, U.K. & USA in 2023 which amounted to US$17.8bn. These 6 jurisdictions represent approximately 31.5% of global GDP so by extension a global scams figure could be US$55bn. Nevertheless other figures just from pig butchering scams have estimated amounts at US$64bn alone. The reported figures of course fail to account for unreported losses/proceeds which are significant (for example Australia reported that 31% of actual victims had likely not reported their experience). Based on these reported and potential unreported figures online scams are unlikely to reach and or exceed US$500bn, but are growing fast.
As for the proceeds from drug trafficking, The UNODC has long estimated proceeds at between 0.6% – 0.9% of Global GDP which would equate to US$630 – US$945bn in 2023. Other credible studies of reported proceeds are consistent with the UNODC range).
Does it matter? Yes it does. The fighting financial crime ecosystem needs to do more research & invest in understanding better the size & scale of major financial crime activities, including those that generate big profits but also those that produce the greatest harms. Harms from drug trafficking are significantly greater than those from online scams, without wishing to underplay the real harms to scam victims. The costs to societies are also much greater from illicit drugs. The Economist needs to take greater care before making an important assertion that online scams rival illicit drugs. The evidence is not there for this yet. It’s also likely not as large as other illict markets like human trafficking where proceeds and harms are also likely greater.
Thankfully the Economists solution is the right one, albeit not original. “To fight the scammers, the authorities must create networks of their own. Today too many police forces that devote huge resources to combating the drugs trade treat scamming as a nuisance and victims as dupes. Instead they need to work with banks, crypto exchanges, internet-service providers, telecoms companies, social-media platforms and e-commerce firms”.
We can agree with that!
Credit: thefinancialcrimenews.com
