Why Asia's 'scamdemic' is everyone's problem that demands global action

Scams-once random nuisances-have become a trillion-dollar global industry, fuelled by forced labour hubs in Southeast Asia's lawless borderlands

By Karishma Vaswani

 

What do a Chinese actor, an Illinois widow, and a young Vietnamese man have in common? They’re all victims of scams — once an annoying and seemingly random crime that has scaled up into a global business that cost the world a trillion dollars last year. The breadth of the industry stretches far and wide, stemming from forced labor gulags in the gray-zone borderlands of Southeast Asia.  

This is a crisis run by international crime syndicates that no single nation can solve, despite many previous efforts. Ending it will require the US and China to put rivalry aside and cooperate in a region where they both exercise huge influence. The alternative? This shadowy industry will only grow bolder, and harder to stop. 

 

 

US Secretary of State Marco Rubio highlighted why clamping down is essential during the 10-member Association of Southeast Asian Nations gathering in Kuala Lumpur last month. Victims, he said, include both Americans and Asians. He indicated that more measures to address the issue would be discussed in their next gathering in October, ahead of a summit to be attended by President Donald Trump. 

 

Washington should treat this as an urgent priority in a region where it has so many key allies and partners. Southeast Asia is ground zero for what’s being called a “scamdemic.” The UN Office on Drugs and Crime has pointed to Cambodia, Laos, Myanmar and the Philippines as centers of this global fraud. 

 

Hundreds of thousands of people have been trafficked and forced into working these scams. Most are men from Asia, but some have come from as far away as Africa and Latin America. Many fell for fake job offers and ended up as modern-day slaves. They often work from fenced compounds and barred-up rooms under the threat of torture, compelled to fleece unsuspecting targets until they find a victim anywhere in the world. One Vietnamese man escaped from a center in the Philippines by climbing a wall, crossing a river, and eventually seeking shelter at a farm. Police found electrocution scars on him.

 

On the other side are the marks. Lulled into a false sense of trust over digital communications with people they never see, they fall prey to cyber fraud or romance scams designed to persuade them to move savings into fraudulent schemes. Fake crypto assets are common. Others are “pig butchered” — fattened up for slaughter — in a euphemism for an investment scam where fraudsters gain their confidence over time and persuade them into investing away their fortunes. 

 

That’s what happened to Erika DeMask, a widow from Illinois, who thought she’d finally found love again, only to lose her life savings — almost a million dollars — over a period of several months. Her online boyfriend told her he loved her, even once sending her a bouquet of flowers. At first, the requests for money came slowly — but soon grew to tens of thousands of dollars. DeMask faced financial ruin, forced to sell her family home. 

 

Shutting scam factories is like playing whack-a-mole — dismantle one, and another pops up. Asean has tried to coordinate efforts before, but with minimal success. Its traditional policy of non-interference in the affairs of member states clashes with the need to address these scam farms, Asha Hemrajani, senior fellow at the Singapore-based S. Rajaratnam School of International Studies, told me. “Many of the victims are Americans or Chinese,” she said. “So it would make sense for the two superpowers to work together to stamp out this scourge.”

 

US citizens are among the top global targets, with an estimated $5 billion lost to online scams in 2024 alone — a 42% increase over the previous year, notes a new report by a commission created by Congress that reviews economic and security relations with China. Across Southeast Asia, hotels, casinos and private compounds that were left abandoned after the pandemic have been transformed into scam farms, run by mainly Chinese criminal networks. The report alleged that the shadowy organizations behind them have unspecified ties to the Chinese government, expanding across the region with, at a minimum, tacit approval from elements of the Communist Party. 

 

Beijing denies explicit involvement, while insisting that it’s fully committed to tackling the problem. In a statement in January, the Ministry of Public Security said that it “will continue to maintain a high-pressure crackdown on cross-border telecommunications network fraud crimes,” increase international cooperation, and “make every effort destroy overseas... fraud dens, arrest the ‘financial sponsors’ and backbones of criminal groups,” and free trapped people.

 

The government does intervene when it believes the damage to national interests have reached boiling point. Typically, this is when criminal syndicates hurt Chinese citizens overseas — as was the case in a high-profile disappearance of actor Wang Xing in a town in Thailand bordering Myanmar earlier this year. He was later rescued by Thai police from a scam center where he had been lured by human traffickers.

 

China has urged people to beware of fake overseas job offers that could lead to human trafficking for scam-farm employment. The Hong Kong government has issued a similar warning. 

 

For its part, the US could train Southeast Asian police to combat cyber and cryptocurrency crimes carried out by transnational syndicates, using experience gained from fighting against narcotics organizations in Latin America. Providing human-rights training to assist in protecting trafficked victims would help.  

 

China has more leverage. Its relationships with Myanmar, Cambodia, and Laos position it to crack down on scam hubs far more effectively. There is precedent — Beijing has worked with both the Myanmar military and anti-junta rebels against crime networks. Joint law enforcement cooperation with the US could amplify those efforts. 

 

Washington and Beijing may be locked in a bitter trade war, but they have put that aside in the past to combat flows of fentanyl into the US. Finding common ground against scammers stealing from grandmothers shouldn’t be such a stretch.   (Disclaimer: This is a Bloomberg Opinion piece, and these are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper)