Last year, the Human Rights Initiative published a Critical Questions on human trafficking to forced scamming centers, sometimes called “fraud factories.” This is part two of a two-part follow-on series. Part one explores the changing human trafficking operations that populate these centers, as well as the emergence of new centers in Southeast Asia and beyond. This part explores the scams emanating from these centers, including the resultant national security threats and the scammers’ embrace of new technologies.
The authors refer to human trafficking victims forced to commit scams as “scammers” throughout this piece to distinguish them from the victims of the scams, but we recognize that the trafficked scammers are victims themselves.
Fraud factories have their roots in the collapse of Southeast Asia’s gambling industry and are closely tied to Chinese criminal groups. Before the Covid-19 pandemic, Chinese criminal groups invested billions of dollars to develop large casinos and hotels in Southeast Asia. These gambling centers were predicted to attract millions of tourists annually and generate substantial income for criminal networks. When the Covid-19 pandemic brought lockdowns and strict border controls, preventing gamblers from traveling, criminal groups sought new sources of profit. Many repurposed the facilities into cyber-scamming compounds where victims of human trafficking (“scammers”) are forced to scam victims out of billions of dollars. As this is a relatively new phenomenon, governments and other relevant stakeholders are still working to understand the complex trafficking patterns and sophisticated scams emanating from these fraud factories. This piece will focus on the complex cyber scams, particularly how experts’ knowledge of this field has evolved since the pandemic’s early days.
Q1: How have advanced technologies expanded scammers’ reach and tactics?
A1: Criminal syndicates exploit advanced technologies to deceive victims quickly and effectively, making their scams more lucrative. In January 2024, the UN Office of Drugs and Crime (UNODC) reported that scammers are using deepfake technology to “execute social engineering scams with alarming success rates, exploiting people’s trust and emotions.” From 2022 to 2023, the Asia-Pacific region experienced a 1,530 percent increase in deepfake fraud, prompting several countries—including Malaysia, Singapore, and Indonesia—to issue warnings about deepfake scams. This technology helps scammers conduct investment fraud, create deepfake pornography, and carry out schemes impersonating police officers, celebrities, and family members. Criminals have also used it to bypass digital verification systems and know-your-customer measures, posing a threat to financial institutions and “adding to challenges related to money-muling [and] money laundering.”
Scammers also utilize large language models (LLMs) as part of their social engineering campaigns. Europol highlighted that LLMs like ChatGPT help scammers craft more authentic-sounding messages to gain victims’ trust and persuade them to invest “faster, much more authentically, and at a significantly increased scale.” The creation of new LLMs such as FraudGPT—an AI bot available on the dark web made specifically to write scam pages, spear phishing emails, and even create password-cracking tools—is a concerning development as it enables a scammer with only a basic understanding of technology to conduct advanced scams.
Furthermore, recent reports exposed a Chinese cybercrime syndicate using an “advanced technology suite” and trafficked victims to profit from the illegal global gambling economy. Using fake identities and credentials, front companies operated by Chinese criminal groups secured European football club sponsorships to advertise gambling sites throughout stadiums or on players’ jerseys. After attracting victims to their sites, criminal groups rely on an advanced technology suite that includes software, domain name system configurations, web hosting, payment systems, and mobile apps to extract profit. These operations utilize trafficked labor to run the online gambling operations and provide customer support.
Further, according to the UNODC, criminal actors are using malware, including information-stealing malware (infostealers). Infostealers steal sensitive and personally identifiable information such as login details and financial information, which criminals can sell to underground data markets or use to extort victims or infiltrate a victim’s system and move laterally. In February 2023, for instance, the People’s Republic of China (PRC) cracked down on an organized crime group based in Myanmar that trafficked Chinese nationals and forced them to commit sextortion fraud. Scammers first coerced victims into installing malware that allowed them to steal the victims’ mobile phone contacts. Then, scammers pressured the victim to participate in graphic video calls and finally threatened to share the videos with the stolen contacts unless the victim paid a “deletion” or “confidentiality” fee.
Recently, criminal groups have been able to buy and sell highly technical products and services on underground marketplaces and forums, creating a “thriving criminal service economy.” For instance, criminal actors can buy infostealers for as little as $50–250, as well as recruit money mules to launder funds and purchase sensitive personal information. This has allowed criminal groups to specialize, building upon their technical strengths while outsourcing other services. Worryingly, these marketplaces lower “the barrier to entry across a range of cyber and cyber-enabled crimes.”
Q2: How is this impacting the United States? What are the national security implications of this evolving threat?
A2: “This scamming industry could soon rival fentanyl as one of the top dangers that Chinese criminal networks pose to the United States,” said the United States Institute of Peace (USIP) Senior Study Group on Transnational Organized Crime in Southeast Asia.
U.S. citizens are frequently victims of the Southeast Asian scamming industry. USIP estimated that Americans lost $3.5 billion to scams specifically originating in Southeast Asia in 2023, highlighting that “U.S. residents are now a top target of the crime networks’ financial crimes.” This huge financial loss prompted the U.S. Department of the Treasury to publish an alert in September 2023 warning financial institutions and the public about pig butchering scams. Further, Americans may be at risk of being trafficked to work in fraud factories. While there is little publicly available data on Americans being trafficked, the FBI issued a warning to U.S. citizens about false job advertisements linked to labor trafficking at scam compounds, suggesting it is a rising concern.
The presence of these centers threatens democracy and the rule of law in Southeast Asia. According to the Bali Process, an international forum on issues related to human trafficking, money from the scam centers ends up in the pockets of “unscrupulous businesspeople, and in many cases, corrupt bureaucrats and law enforcement officials, who are also essential to facilitating these operations.” For instance, in September 2024, Philippine ex-mayor Alice Guo was removed from office due to alleged ties to illegal gambling operations. A raid on the gambling facility built on land that she partially owned found hundreds of trafficked workers forced to commit online scams. She is also accused of money laundering and having ties to Chinese criminal syndicates. Similarly, the 2024 Trafficking in Persons (TIP) Report highlights that Thai officials accept bribes from brokers and smugglers in border regions, allowing “traffickers to operate with impunity.” Corrupt officials who directly benefit from the scam centers may influence national and regional politics, eroding democracy and transparency while undermining law enforcement efforts to combat trafficking.
More generally, the injection of money from fraud centers furthers lawlessness. Cyber scamming in Southeast Asia generates more than $43.8 billion annually, primarily going to criminal and malign actors across the region. A trafficking expert noted that the funds have gone toward drug production and trafficking, arms trafficking, sex trafficking, and exotic pet trafficking. These illicit funds have even been found to finance militias affiliated with Myanmar’s military junta and, indirectly, the regime, which has committed crimes against humanity and war crimes. The Burma chapter of the 2024 TIP report highlights that there have been “regular and increasing reports of military, police, local official, and [ethnic armed organization] corruption and complicity” in the scam centers, underlining the deep entrenchment of these enterprises.
The targeting of Chinese nationals and resulting financial outflows from mainland China is worryingly motivating Beijing to expand “the presence of China’s authoritarian police around the globe.” The PRC has sent police to Thailand, the Philippines, Cambodia, Laos, Vietnam, and Indonesia to combat scamming compounds, which raises political concerns. According to Mina Chiang, founder of Humanity Research Consultancy, “China hasn’t been hiding its ambitions in projecting its police powers overseas . . . sometimes with little regard for local authorities.” For instance, in 2017, Chinese detectives traveled to Fiji to investigate Chinese nationals running internet scams from the island nation. While the Chinese nationals were suspected of legitimate crimes, the Chinese police did not work with local authorities but rather “came in and did what they wanted” without proper documentation or extradition hearings.
Q3: What can relevant stakeholders do to prevent victims from being defrauded, especially as scammers leverage emerging technologies?
A3: The scams emanating from fraud factories have evolved considerably since this phenomenon exploded during the Covid-19 pandemic. Governments, civil society, international organizations, and tech companies are still formulating guidelines to prevent people from falling victim to these increasingly advanced scams. The authors offer the following recommendations:
Hold key perpetrators accountable: The U.S. government should enact sanctions, travel bans, and asset seizures against key scam center leaders. In a positive first step, the United States, United Kingdom, and Canada imposed sanctions against nine people and five entities involved in Southeast Asia’s scamming industry in December 2023.
The United States should continue to criticize Cambodia’s crackdown on press freedom related to the scams and the country’s denunciation of international efforts like sanctions to address the growing problem. On September 30, 2024, Mech Dara, a “leading voice against human trafficking and online scams,” was arrested, sparking international outcry that his arrest was “likely retaliatory” for his reporting on scams. Though he was released in late October 2024, his arrest significantly impacted local efforts to report on organized crime. Because of the country’s seeming unwillingness to tackle the issue, scam centers are relocating to Cambodia to evade crackdowns elsewhere, so the United States should pressure Cambodia to take meaningful action.
The U.S. government and its allies should also pressure the PRC to increase transparency in its policing activities abroad. Beijing should clearly state its objectives and timeline as well as clarify what happens to the seized assets after a scam center is shut down. Local law enforcement agencies should lead these operations and be empowered to vocalize when PRC forces overstep, such as in cases where arrests or deportations occur without proper legal proceedings. At the same time, the U.S. government and partner countries should continue to point out the PRC’s involvement in the criminal networks behind the scam centers (“name and shame”) to motivate continued PRC cooperation with multinational law enforcement efforts in cases beyond those where Chinese citizens are defrauded. The PRC has considerable influence in the region, which it could use to share best practices and hold key players accountable.
Hold the private sector accountable: The U.S. government should hold social media companies to accountor online criminal activity. A commentary by the RAND Corporation notes that social media companies are “unlikely to self-regulate effectively,” so the government should consider taking steps to regulate online platforms. This could include passing laws that establish greater transparency and reporting requirements or revising the Communications Decency Act to hold social media companies liable for harms caused by harmful content on their platforms. The government should also consider banning or taking other punitive action against app stores for hosting apps used by criminal groups.
Social media companies should work closely with law enforcement to remove and investigate fake job postings and content linked to scams. Some platforms have historically been more willing to do so than others. Telegram, in particular, has been resistant to cooperating with law enforcement, even though communication between criminals occurs openly and without punishment on the platform. Notably, in late August 2024, Telegram founder and CEO Pavel Durov was arrested and indicted on charges including managing a digital platform that enables illegal transactions, facilitating crimes such as drug trafficking and fraud, and refusing to cooperate with law enforcement. Meta, X, and others should continue to strengthen their collaboration with law enforcement and invest in proactive monitoring to quickly detect and remove scam-related content. These companies should also look for ways to limit scammers’ initial access to their platforms.
Similarly, because many scams involve convincing victims to invest in cryptocurrencies, cryptocurrency companies should continue to collaborate with law enforcement. Further, law enforcement agents need to be trained in how to use blockchain to investigate and follow cryptocurrency money flows. Finally, to prevent scams from occurring, cryptocurrency platforms should implement robust identity verification processes such as multifactor authentication and know-your-customer procedures, including ID card and document (such as utility or medical bill) verification and biometric data checks. They should also continuously monitor transactions to quickly detect suspicious activity.
Increase collaboration: Fraud factories cannot effectively be addressed without a comprehensive global effort. As a top target of scams, the United States should use its convening power to coordinate initiatives that bring together diverse stakeholders. Several existing bodies could partner with the U.S. government or serve as a model for collaboration.
- Operation Shamrock convenes social media companies, the financial sector, law enforcement, and nongovernmental organizations to combat online scamming. According to USIP, due to its strong interdisciplinary approach, Operation Shamrock could serve as a model for a U.S.-led effort or an invaluable partner in the fight against scam centers.
- The Tech Against Scams Coalition brings together large social media, dating app, and cryptocurrency companies such as Meta, Match Group (owner of Hinge and Tinder), and Coinbase, as well as the Global Anti-Scam Organization, to share intelligence and exchange best practices. The U.S. government could partner with the coalition, sharing valuable insights into the changing nature of scams and innovative ways to combat scams.
The U.S. government should also work with regional and international organizations to address this issue. For instance, Association of Southeast Asian Nations (ASEAN) leaders agreed to cooperate to fight online scamming. The United States could support an ASEAN-led effort, perhaps utilizing the annual U.S.-ASEAN summit to advance Southeast Asian initiatives. Similarly, INTERPOL organizes international law enforcement operations targeting scammers, so the U.S. government should continue to support and publicize INTERPOL’s efforts.
Expand efforts to raise awareness and improve potential victims’ scam recognition: Governments, tech companies, and civil society should work to create broad awareness of common scams, updating public awareness campaigns frequently as tactics evolve. These campaigns should include real examples of deepfakes, social engineering campaigns, and fake cryptocurrency platforms.
Governments should also work with private sector companies to develop and disseminate services that can help potential victims recognize scams. For instance, in mid-2024, Singapore launched CheckMate, a free WhatsApp bot that can identify scams and disinformation. CheckMate uses AI to classify messages in one of seven different categories, such as “scam,” “legitimate,” or “spam.” It then asks if it can include the message in a national scams database, which could provide up-to-date examples for public awareness campaigns. This program is relatively new but, if scaled up, could enable victims to identify scams more easily.
The criminal networks behind scam centers are quickly adapting to evade law enforcement efforts. Without a well-planned, comprehensive effort to counter them, these operations will continue to exploit new victims and expand to diverse geographies, making use of advanced technologies to do so. Effective action to counter such deep-rooted illegal operations will require robust international collaboration and is urgently needed to protect U.S. citizens and other potential victims around the world.
Julia Dickson is a research associate for the International Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Lauren Burke Preputnik is the former senior program manager for the Human Rights Initiative at CSIS.
