Why scams thrive in Bangladesh

From being scammed by fake callers to losing millions to seemingly legitimate corporations, Bangladeshis seem to be highly susceptible to frauds and scams. Appalling as it is, different scams, e-commerce platforms, and MLM businesses plundered Tk 21,000 crore between 2006-2021. The scams never stopped. Rather, they have morphed, expanded, and victimised a newer generation. Simply blaming the victims for making questionable financial choices should not be the norm. Financial fraud in Bangladesh is not only about individual choices; there are deeper socioeconomic causes behind it, and its ripple effects spread far and wide.

The latest scam, the MTFE, presented itself as a global corporation by incorporating flashy terms like metaverse, crypto, and foreign exchange in its branding. The absurd business model was this: if you can secure "investments" from a minimum of 100 people, amounting to a crore minimum, you get the title of CEO. As the Ponzi CEOs closed their offices recently and their fraudulent activities came to light, law enforcement agencies think that more than 400 such CEOs are operating across Bangladesh, and they are not sure how much money they have plundered from millions of people.

Victims are not essentially "forced" to invest in fraudulent businesses, but they are deceived with flashy offices, lucrative returns, and shady recruitment practices so their hard-earned money can be funnelled to the top of the pyramid. The first generation of scammers wanted to sell their products to customers that did not exist, which was the case for fraudulent companies like Jubok and Destiny. Then came the dawn of computer-assisted scams, where shady businesses offered unbelievable discounts, consumers invested millions, got some products in return, and the rest was looted and laundered. But the question remains: despite such glaring examples, how are so many people still defrauded?

Weak regulatory authorities, limited to no investor education, economic instability, unemployment, and attraction towards becoming rich quickly seem to be the problems upfront. However, deep-rooted distrust in mainstream financial bodies, reluctance towards government warnings, and the inability to verify fraudulent claims should also be blamed.

Scammers usually target people looking for jobs, or young people who are unsure about what to do with their small savings. Some are even coerced by their peers to sell their assets and invest in these schemes. One might think lack of education is the reason why people are falling victim to scams, but even highly educated government officials are victims of online and offline scams. Recent data breaches of public websites also brought forward a new wave of fraudulent activities. The scammers scraped personal information from websites and swindled thousands. The perpetrators often feel encouraged to commit the crimes because they know they can get away with it.

As we strive to mitigate the dire consequences inflicted by these fraudulent activities, we must recognise that effective solutions extend beyond mere regulation and law enforcement.

Scams, which may seem entertaining on social media, have far-reaching detrimental consequences. People have even taken their own lives after being defrauded. Families are in a state of disarray after losing millions, and have little to no hope of ever getting their money back. The government, from time to time, promises to look into the matter, but the victims have rarely been compensated. Recent estimates show that around Tk 22,000 crore is trapped in fraudulent MLM or e-commerce platforms in Bangladesh, but the numbers might be even higher as scam victims are ashamed of disclosing how they lost money.

Modern scams are disguised as legitimate businesses or are designed to trap people by abusing their digital footprints. Such multi-dimensional crimes are not easy to stop, but the path forward requires a comprehensive approach that addresses both prevention and recovery. As we strive to mitigate the dire consequences inflicted by these fraudulent activities, we must recognise that effective solutions extend beyond mere regulation and law enforcement.

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As a starting point, a robust regulatory framework must be established by the government, where intelligence is shared among stakeholders, and law enforcement is trained to take preemptive action even before victims are targeted. Stringent laws, coupled with swift legal action against perpetrators, would serve as powerful deterrents. Specialised task forces, working in conjunction with international counterparts, can monitor cross-border operations and bring culprits to justice. The government should also establish a hotline or assistive network so investors can get clear and concise data to differentiate between legitimate and fraudulent businesses.

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Widespread awareness and education campaigns are also required, and should be strategically disseminated through various media outlets, workshops, NGOs, and seminars. Engaging local influencers and respected community leaders can amplify the message and create a network of vigilance against such scams.

To the victims: you shouldn't be too hard on yourself if you have fallen prey to one of the many traps in our society. Scams and broken dreams are universal, but our regulatory bodies, authorities, and law enforcement agencies cannot evade responsibility as millions suffer in nationwide scams. Dedication to enforcement, public participation and education in reporting suspicious activities, and the dissemination of knowledge will collectively fortify the nation's resilience against fraud. This concerted effort is the key to safeguarding citizens and ensuring a stable economic future for Bangladesh.

Kazi Mahdi Amin is a development worker.