667. Here’s Why You Are Constantly Fighting Off Scammers

In January, a 38 year old Chinese born entrepreneur named Chen Zhi was arrested in Cambodia and extradited to China. He was one of the richest people in Cambodia and one of the best connected. He was an elite businessman who also served as a government adviser. A few months before this arrest, it was the US government who went after Chen. They designated his holding company a transnational criminal organization, and they charged him with fraud and money laundering. They also seized $15,000,000,000 worth of crypto. Where did all that crypto come from? Chenxi, in addition to running a real estate development firm and other businesses, allegedly ran a massive online scamming operation that specialized in what the Chinese call pig butchering. That means fattening up the scam victims for months or years. And then when the time is right, the slaughter. US prosecutors say that cybercrime in Cambodia generates as much as $19,000,000,000 a year, which would account for roughly half of the Cambodian GDP. The US government says that scammers in Southeast Asia stole $10,000,000,000 from Americans in 2024 alone. There were other victims too. After Chen was arrested in Cambodia, thousands of his workers fled the country. They had reportedly been trafficked to Cambodia, and they were being held against their will at scam compounds. Today, on Freakonomics Radio, is it fair to call scamming an industry? It is absolutely an industry, a very complex, always evolving, very competitive industry. We will hear how the industry works from getting hold of your data. Privacy is a myth. Our information is out there, and it is available to the highest bidder. To the daily economics of the industry. You can send a message now to a 100,000,000 people. And if you get point o 1%, that's still 10,000 people who will maybe send you a thousand dollars, and all of a sudden you've got $10,000,000. So is there anything to be done about it? Let's find out together starting now. This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen Dubner. Okay. So let's start with this. Just how much scamming are Americans dealing with? There is a lot of variation in estimated prevalence of scams and fraud. That is Martie De Lima, a professor at the University of Minnesota. The best estimates, and I'm about to do a meta analysis on this actually, indicate that fraud affects ten percent to potentially twenty percent of Americans per year. And when you say affects someone, that's a very wide verb. Does that mean there's a loss involved? It means that they transferred money to the criminals, and the base rate of exposure is incredibly high. Give me a day that you haven't received a bogus text message, a phone call, a scam email. I mean, imagine if other types of crimes targeted us at that same base rate. D'Lima isn't a criminologist or a psychologist. She is a gerontologist, which means …