Why Hongkongers are easy prey for a new breed of con artist

Whether they’re seeking love online or just looking for ways to make a quick profit, more and more people are falling victim to various scams

PUBLISHED : Wednesday, 09 August, 2017, 8:03am
UPDATED : Wednesday, 09 August, 2017, 10:02am

Few can resist the lure of a good deal, an easy profit, and Hongkongers pride themselves on having a keen eye for a bargain.

Yet while everyone knows the danger of internet and phone crime, barely a week goes by without another high-profile scam being reported, from the recent case of a 23-year-old woman duped by fake immigration officers into handing over her parents’ HK$1 million life savings, to lonely hearts looking for relationships online but ending up being swindled by phoney lovers.

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The rising number of deceptions – up 5.7 per cent in the first half of this year compared with the same period in 2016 – is in stark contrast to Hong Kong’s overall picture, with recorded crimes hitting a 38-year low during the first six months of this year.

Given the widespread publicity around scams, why do Hongkongers keep falling for them?

According to Ben Yates, a senior associate in Hong Kong with international law firm RPC, the lack of viable investment options has made the city a hot spot for con artists.

He said people who were unable to afford property and had been turned off by the low yields on investments were ­particularly susceptible. Yates also thought the way some Hongkongers used apps like WhatsApp for both personal and business matters made them more vulnerable.

“It’s breaking down the formality of communication between people in a context where that is actually dangerous,” he said.

“A lot of people are treating a conversation with a supplier or a business contact in the same way that they would treat a chat with a friend. This helps to explain the growing number of cases of criminals impersonating individuals in order to deceive bank account holders into transferring money to someone else’s account.”

There are more and more criminals with access to the internet ... with a growing understanding of how to exploit people’s vulnerabilities
Ben Yates, international law firm RPC

There’s more bad news: Yates expected such scams to keep growing in Hong Kong.

“It is a global problem, and I think it is an inevitable consequence of the rapid growth in the use of technology in all aspects of people’s lives, while knowledge of how to use that technology safely, and how to regulate it, lag behind,” Yates said.

“There are more and more criminals with access to the internet around the world, with a growing understanding of how to exploit people’s vulnerabilities – in many cases, real human frailties, rather than technological vulnerabilities. And I think this will increase.”

Last year Hong Kong was rated the most connected place in the world by market research company GfK, which ranked how much consumers connected with each other using various devices.

The high rates of internet and social media usage meant there were more consumers in the city who were “potentially vulnerable” to “weapons of mass annoyance”, said Roderic Broadhurst, a criminologist at Australia National University and founder of the University of Hong Kong Centre for criminology.

“The ecosystem, the environment, is much more dangerous than it was 10 years ago,” he said.

City University of Hong Kong criminologist Oliver Chan Heng-choon felt materialism was also a strong factor at play.

“Hong Kong is a very materialistic type of society. Many people, especially young adults and youngsters, just do not want to miss out, do not want to lose their status.”

Ian Barlow, a former Hong Kong police officer and a certified fraud examiner at security risk management consultancy Softly Softly Consulting, said people were often tempted by the “lure of easy money”.

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“Add the highly competitive and acquisitive culture of Hong Kong to the mix, and the result is a fertile ground for scam merchants.”

It all sounds very doom and gloom – but how bad is Hong Kong’s scam problem compared with the rest of the world?

The world’s largest security software provider, US-based Norton by Symantec, said the city’s scamming problem did not seem especially bad compared with other countries.

That was despite the company conducting an online survey of 1,500 Hongkongers in June, which found 59 per cent of consumers had been affected by some form of cyberattack.

Instead, Kurt Wang, senior sales engineer for greater China, said there was a lack of knowledge about cybersecurity in Hong Kong, noting that only one in three respondents said they knew what it meant to protect their personal information online.

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Figures from other developed countries also show a growing problem – although the statistics were unlikely to show the full picture.

In a report released earlier this year, Crime Survey for England and Wales found online fraud was the most common crime in the country. There were an estimated 3.6 million fraud cases and two million computer misuse offences in the year to September last year, although it estimated only 17 per cent of victims reported their fraud to the authorities.

The FBI’s internet crime complaint centre received almost 15,000 romance scams complaints last year, 2,500 more than the year before. In Texas, which has a population over three times Hong Kong’s, there were 1,000 complaints reporting over US$16 million in losses.

Like Hong Kong, Singapore’s crime rate is sinking, but scams involving e-commerce, internet love and impersonation of Chinese officials are on the rise, costing victims S$47 million last year (HK$270 million).

Meanwhile Australia, which has a population three times the size of Hong Kong, received over 200,000 reports of scams to authorities last year, racking up record losses of A$300 million (HK$1.87 billion).

Since 2008 Hongkongers have been swindled out of more than HK$6.65 billion through 24,480 romance, email and telephone scams. On average, 5.4 phone scams were reported each day in July.

Although the number of scams in the city had increased significantly, the level was still in proportion when one took into account that the city was part of China, said David Kneebone, general manager of the Hong Kong Investor Education Centre.

The centre is a subsidiary of the city’s financial regulatory body, the Securities and Futures Commission, and was aimed at improving financial literacy.

Mainland Chinese people might be targeting Hongkongers as they tended to be wealthier than their counterparts across the border, Kneebone said.

We see scams as an intractable societal problem that will ebb and flow, much like the legitimate economy
Emma Fletcher, for Better Business Bureau

Although people could be targeted anywhere in the world, demographic and socioeconomic factors could play into what scams were most likely to affect an area, said Emma Fletcher, director of scam and fraud initiatives for Better Business Bureau, a United States-based nonprofit organisation aimed at advancing marketplace trust.

For instance, an area with a high degree of unemployment was likely to see a higher concentration of job scams, while college towns would be more likely to see student loan scams, she said.

“Think of this as a vast parallel marketplace, where virtually every legitimate transaction has its scam counterpart,” she said. “We see scams as an intractable societal problem that will ebb and flow, much like the legitimate economy.”

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So if scams are growing both in Hong Kong and around the world, what can we do to protect ourselves?

The experts felt Hong Kong’s police were taking useful steps in preventing such crimes, as long as the punishment for offenders was harsh enough to serve as a deterrent. But education was the key issue for most.

Fletcher said one of the challenges with raising awareness was that most people did not think a scam could happen to them. To combat that, it was important to put out empowering messages that normalised the problem and reduced the sense of invulnerability people felt.

“Con artists are very good at bypassing rational thought to get at your emotions, whether that’s love or fear. And once there, they really have you,” she said. “This can happen to absolutely anyone when a scammer’s tactic appeals to a fear, vulnerability or need at just the right moment for that individual.”

Hong Kong’s Investor Education Centre is working with the police to train anti-scam ambassadors, who share their knowledge at educational seminars around the city.

They are especially targeting the elderly – an expanding group as the city ages – but Kneebone noted that everyone must stay vigilant.

“All Hong Kong adults need to be aware, there’s no doubt about it. All Hong Kong adults are potentially victims.”