It could happen to you: introducing “Scam Inc”

The Economist. Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer.

And I'm Rosie Bloor. Every weekday we provide a fresh perspective on the events shaping your world.

We started the week with some startling moves on tariffs by the Trump administration after some serious paroxysms of the markets, the scene is already very different. We ask what's to be learned from all that White House whiplash. And strap yourself in for some glitzy sporting action today. There'll be tension, there'll be expert analysis, there'll be top-flight players battling it out with dramatic voiceovers. It'll be chess.

But first, In parts of Thailand this week, panicked residents queued for fuel after the authorities deliberately cut off power in several towns on the country's eastern fringe. Thailand's prime minister herself authorized the move. It was an extraordinary measure designed to curb an extraordinary industry. Workers at scam centers operating just over the border in neighboring Myanmar have been conning people into fake investment schemes. But the problem isn't limited to remote border towns. All over the world, there are scam compounds like these, stealing billions of dollars. It's an industry everyone is having to wake up to.

Online scams are a big story on my beat as Southeast Asia correspondent. And I've been covering it for a couple of years here in Asia. Then I heard about the collapse of a bank in America that was somehow connected to the rise of online scams. In this part of the world.

In 2022, my colleague Sulin Wong made a podcast about China's leader Xi Jinping called The Prince. Today marks the release of her new podcast series, Scam Inc.

So I thought I had to go and investigate how $47 million went missing from a local bank in rural Kansas.

What do you mean something's wrong with the bank?

We never have problems.

It turns out that the bank CEO had been quietly putting money into some sort of crypto investment until the board called him in to explain himself.

He gave us a scenario of what had happened, and it made little to no sense.

The CEO told them to get the money back, he would need to put in more money. But actually, it turns out that he'd been duped. He placed a big bet on a scam. And this wasn't any kind of scam. It was something incredibly sophisticated and predatory.

What got a hold of a guy that I perceived as being capable of making better decisions than that. What got a hold of him to wipe that out? You know, if it was truly a scam, I struggle.

So that's really where my investigation started, but it ended up taking me in all kinds of incredibly unexpected directions.

Sulin, it is such a fantastic series. Incredible reporting, enthralling. Listen, I'm really excited that people are going to get to listen to it. Without giving too many of the twists and turns away, give us a sense of the broad span of your investigation.

So my investigation started with this bank collapse in rural Kansas, but very quickly I went to meet the scammers and realized that this is a multi-billion-dollar industry which rivals the size of the global drug trade. And each episode peels back a layer. So in one episode, I delve into the China aspect of this and how the Chinese Communist Party is connected. In another, I look at the English Premier League and how scam money ends up there sometimes. I also trace the money from the bank collapse in rural Kansas, and that takes me all around the world to Cambodia, of all places. And I learned so many things from this investigation. But one really important thing was that there are so many different ways to be a scammer, and there are so many different scams around us. But ultimately, every single one of these criminals is focused on mining our vulnerabilities, going after our frailties to make money.

So, Lynn, one reason Scam Inc. is such a great listen is because it takes so many unexpected turns. But I'm interested in what most surprised you in the investigation.

Oh, good question. I would say the psychology of all of this. I started out wanting to try and understand how this bank in Kansas collapsed, but I realized one of the other very big questions questions was, why do people fall for scams? And what is the human psychology behind this? To answer those questions, I spoke with lots of scammers. Lonely people spend a lot of time on social media. So we had to find people that were vulnerable, people that didn't have a support system, someone that was actually lonely, you know. I even had to be a voice caller because we had guys as well, so they couldn't call their customers. So I had to call for their customers and all that. I started out thinking, you know what, I would never fall for a scam. And I have to admit that after this investigation, I've completely changed my view. And I genuinely believe I could fall for a scam just because of how sophisticated these scammers are and how deeply they understand human vulnerabilities and our frailties and our psychology.

Has it completely destroyed your faith in humanity?

Oh, Rosie, what a question. I mean, yeah, in a way it really has, because it's not just that the scammers are so good at their psychological manipulation. There's an incredibly violent and coercive element to this story. And a lot of my reporting was about human beings doing horrific things to other human beings. So I ended up visiting the Philippines and doing some on-the-ground reporting there, and up close I saw the punishments for people who weren't able to scam effectively.

Yeah.

Oh my goodness. So we're on the ground floor of the building and we're at the very end.

Yes.

As you can see, if the torture victims will moan or, you know, will shout over being in pain, the people from other rooms will hear it.

They've designed it that way.

Designed it.

Because the wall is basically cardboard. And it's not just that the criminals have infiltrated the Philippines. They've actually infiltrated countries all over the world, not just in Asia, but in the Middle East, in Africa, in South America. And there was even a scamming operation discovered recently on the Isle of Man.

Sulin, something that you and I have talked about before is that a really good piece of journalism slightly changes the way you think about the world. And I would say this absolutely does that. It's very much changed how I think about things. I'm wondering how it's changed how you approach the world now.

I remember when you first said this to me before we started working on Scam Inc. together, and I think this story has changed my perception of the world around me in a lot of different ways. I'm really spooked about the direction this multibillion-dollar industry is heading in, especially with the rise of AI and the fact that these scammers are making so much money that they can buy the best and the latest technology. One example is I'm now really afraid of AI voice cloning and the fact that scammers only need 15 seconds of your voice before they can clone it and make it sound just like you. So I've actually implemented a family code word. And I've told everyone in my family that if someone calls them sounding like me, and saying they're me, my family should be incredibly suspicious and ask, well, what is the code word? Because I'm just so freaked out by how quickly AI voice cloning technology is developing.

So Sulin, given that this is both a brilliant story and a public service, remind all of our listeners where they can hear it.

So you can listen to Scam Inc. wherever you get your podcasts. The first 3 episodes are free, and the rest will be for subscribers. So I encourage everyone to subscribe.

Thank you so much. Great to talk to you, and congratulations on a really brilliant series.

Thank you so much, Rosie. Great to chat.

There has been tremendous whiplash for the world and also for here in Washington, D.C. on the matter of trade over the past week.

Simon Rabinovich is our U.S. economics editor.

Last weekend, it looked like Trump was going to bring in big tariffs on Canada and Mexico that would have potentially destroyed the integrated North American economy. He relented on Monday. At the same time, he's brought in extra tariffs on China, and people here in DC and really around the world are looking to see what his next move is going to be, and they're worried that the direction for tariffs is only going one way, is going up, and that's going to cause a lot of chaos for businesses and a lot of problems for the global economy.

I mean, we did speak on Monday about the first tranche of tariffs coming out and what dangers they pose, but as you say, they were rescinded. What happened there?

The best way to look at how people think about the uncertainty is basically what's been priced in, and you could see last Friday afternoon when Donald Trump's press secretary basically made it clear that he was going to move ahead with tariffs on Canada and Mexico and China. Stock prices fell, the price of oil rose, virtually every currency fell against the dollar, which is what you'd expect to happen if he actually went ahead with the big tariffs. All of those moves began to go into reverse on Monday afternoon when it was clear that President Trump was in fact relenting, or at least putting the tariffs on Canada and Mexico on pause for 30 days. But you've not seen a great big market recovery because there's still so still so much uncertainty and, you know, really a residue of concern that he's left behind. It would have done tremendous harm to American manufacturing because American factory operations are truly integrated on continental scale, and they wouldn't have been able to survive the kinds of tariffs of 25% on Canada and Mexico that he was talking about. And you've got everybody trying to figure out exactly what the next moves are going to be. He's talked about absolutely going after the European Union, potentially putting big tariffs on semiconductors from Taiwan, and ultimately pushing for an across-the-board universal tariff, which would really bring the state of global commerce back to almost Great Depression-era levels of protectionism. So this is an inauspicious start of the Trump presidency for the global economy and for companies.

We talked on the show about the degree to which market moves might cause a change of heart for Mr. Trump. Is that what you think is going on here?

Trump himself denies that through his press secretary. Having said that, it's clear, and I've been told through my conversations in DC, that there were a lot of businesses that behind the behind the scenes were basically doing a full-court press with the White House saying that if he actually went ahead with these tariffs, especially the North American tariffs, it would have been incredibly bad for businesses from automakers to agriculture. And so there was a lot of furious lobbying by businesses to get him to basically change his mind and to put things on hold.

What to take away from this then? What do you think we've learned in terms of how Mr. Trump might proceed with the whole protectionist project here or what people should expect?

Well, I think there's a few things that we've learned. So I think number one, most importantly, is that President Trump is a lot more aggressive than in his first term, both in terms of his domestic agenda, but also in terms of his international agenda and what he wants to do with the tariffs. Last time around, it took him a couple of years and multiple investigations to build up to eventually putting in an architecture of tariffs that covered about $380 billion worth of imports into the US. This time, His US trade representative has not even been confirmed yet, and yet he already announced tariffs that would've covered roughly $1.4 trillion worth of imports into America, nearly 40% of America's total imports with promises of a lot more to come. So he's a lot more aggressive. That's number one. Number two, you know, there's this long-running debate about does he see tariffs as valuable because they protect the American economy in his view, Is he simply using them as negotiating leverage? I think this past week has sort of made unambiguous that he is a true believer in tariffs. I mean, yeah, he does think that they give them negotiating leverage, but I think he also believes that they really are good for the US economy, that they'll bring about a renaissance in manufacturing. They'll generate revenue for the federal government, allow it to cut other taxes. So he's a true believer and he's much more aggressive and much more unencumbered than last time around.

But stepping back a bit, even though it has been a tremendous amount of chaos, you might argue this has been something of a win for the president. He extracted some concessions from Canada and from Mexico. Even if he is a true believer, the idea that they are a good negotiating tool remains true, whether that's his motivation or not.

To step back, let's look at the concessions that President Trump did actually get from Mexico and from Canada. In large part, they reiterated what were their existing policies for trying to make border controls a little bit tighter to stop the flow of drugs drugs and illegal immigrants into America. One analogy that has been used by some is that it's as if somebody went into a convenience store with a suicide vest on and walked out with a packet of gum. So he really hasn't actually achieved all that much from using all of this leverage. You are right though, people do talk about Trump applying sort of the madman theory of negotiations, of diplomacy, and you can see, you know, some areas in international relations where maybe that has, has had some effect. Certainly the ceasefire in Gaza arrived at the very start of Trump's presidency as evidence that maybe this does work. But I think in the economic arena with trade negotiations, this is actually a really crazy way to go about things because even if you do succeed, and America does, let's be clear, have a lot of leverage as the world's biggest economy, as the world's biggest import market, even if you do succeed, you sow a tremendous amount of uncertainty. And although he's not actually placed tariffs on Mexico, Mexico and Canada, you better believe that companies that are looking at big investments that take advantage of the North American market are going to think twice, are going to put those kinds of investment plans on hold so long as President Trump is in the White House, so long as the potential threat of tariffs exists. And economists who've looked at it over the years have shown that it's not the tariffs alone, it's the uncertainty about tariff policy that hurts investment, that hurts hiring, that leads firms to delay all kinds of plans. And so this kind of recklessness, you know, Maybe it seems to give Trump a lot of power, but ultimately it really begins to weaken America's reputation as a stable place to do business. This is not going to be something which in the long term, let alone the medium term, is beneficial to American growth.

Simon, thanks very much for your time.

Thank you, Jason.

It's not just a game.

It's a sport.

And it's time it felt like one.

Lots of games and sports are going through rebrandings these days to draw in wider audiences, open new markets, monetize broadcast rights, turn star players into brands.

Get closer to Feel every move.

Live every moment. This time it's chess, and the game's— uh, sport's greatest player, and perhaps its only existing brand, wants to bring bling and drama to it.

The game's not changed, but the experience has.

There's no—

Actually, the game kind of has changed. Just as other sports have twiddled the rules to make things more exciting for audiences, Kasparov in a quiet room It ain't.

The Freestyle Chess Grand Slam Tour is a brand new chess tournament that's been created by Magnus Carlsen, one of the strongest players of the modern era, and a German business partner.

Tim Cross is a senior science writer for The Economist.

Essentially, the idea is they want to try and make chess as thrilling as Formula 1.

Forgive my skepticism here, but how are you going to make chess thrilling?

Well, for millions of people, of course, it already is. So if you look at the Chess World Championships from 2024, that got several million views across a bunch of different YouTube channels. And then Magnus Carlsen himself is kind of quite a draw. He's probably the first chess player since maybe Garry Kasparov 20 years ago to kind of semi-breakthrough into the mainstream. 7, g6.

Uh-huh.

Well, 3.

Ah, b1 castles.

So again, you can see these YouTube channels of him doing all these kind of like chess stunts where he plays chess against sort of 6 people simultaneously while blindfolded and has to remember all the positions in his mind.

Board 5, Bishop B7. Okay.

So there's already a fan base for this stuff. And chess is like any other slightly niche pastime. The internet, which lets you broadcast it cheaply, has revolutionized things. But their idea is you take that existing fan base, and then you add a whole load of glamour and glitz, and a bunch of broadcasting innovations to try and make it attractive and friendly for people who maybe know how to play chess, but aren't exactly fans.

But in terms of broadcasting it to the world, though, how to convey all of this, how is that gonna change?

Part of it is the choice of location. So, the first event in the tour starts today in a luxury resort on the northern German coast. And then from there, they're gonna visit Is it Singapore, Delhi, New York, all these sort of glamorous locations?

We're live from our silent world yacht. It's not going to be very silent in here once the moves get going up there. Not at all. And it is somewhat weird, right?

They did a test run of the event last year where they ended up playing chess on the top of skyscrapers in Singapore or on board luxury yachts. And there was women in slinky dresses walking around, and it was all quite a sort of James Bond vibe.

And in what way is this gonna be made more friendly for people who are not already super fans of chess?

So, one thing you have, for instance, is there's a black and white bar on the side of the screen, which goes up and down depending on whether a chess computer thinks that white or black is winning. So you can kind of see, even if you're not playing at grandmaster level, "Oh no, black's made this amazing move and now black is winning." But one of the things I was told, which I think is interesting, is they've said they think the commentary is almost as important as the players.

That said, you have to spend time to eat, basically.

Right?

Like, you have to wait.

What are you talking about?

Pontex Pawn is one move.

That's another pawn sacrifice that Fabi's gone for. I'm getting to that part.

I'll get over that point in a second.

You know, Fabi, I don't care about the pawn on the left.

So they're going to have two separate streams, one for the dedicated aficionados where you get analysis and people throw around terms like the Sicilian Defense and all this kind of thing. And then one for complete gumbies like me who I know how to move the chess pieces around a board, but I wouldn't say I was any good at the game. And any kind of formal chess jargon is banned. And they're going to try and explain it as best they can to people who aren't aficionados. And then there's lots of other cool ideas. So they're gonna wire the players up with heart rate monitors so you can see when they're getting stressed. But I think the biggest innovation is gonna be in the kind of chess they're playing.

Which is not the chess as I know it?

No. So this is where the freestyle thing comes from. They're taking a form of chess that was actually developed by this American grandmaster called Bobby Fischer about 30 years ago called Fischer Random Chess. They've renamed it freestyle 'cause that's sexier, I guess.

The world of chess in a completely new light. We call it freestyle chess, played according to the rules of Chess 960. Chess 960 ensures surprising games from the very first move.

The basic idea is that all the non-pawn pieces for both sides, so the knights, the kings, the queens, the rooks, and so on, their starting position is randomized at the start of every game. So there are 960 different starting positions, and each game will feature a new one that you've never seen before.

What's the merit of doing it that way?

Well, so if you listen to Carlsen, he thinks that the problem with standard chess is basically that the, first part of the game has become boring. So computers are so good now, they're miles better than any human player. And so a lot of standard chess games, the thing you do is you spend loads and loads of time preparing. So you go, well, what if this is my opening move and then he responds like this? And you work through gazillions of scenarios with a computer and kind of commit them all to memory. And so sometimes you'll see players will make like 10 moves just by rote off the tops of their heads before they even really have to start thinking. And so the idea is if you randomize the starting positions, you have to play much more intuitively and with much less computer help than you would in a standard game. And the idea is that makes it more exciting.

I guess my question is, will it? Is that going to work? Will this be the next big sport to watch because it's so thrilling?

I'm not sure the goal is necessarily to topple football from the number one spot, right? But I think they think I think there's a lot more room to grow. And one of the other things they want to do is to make stars of the players as well, so that beside what's happening on the board, you get a sort of narrative where you're like, oh, this guy, you know, he's really good at calculation, but he falls apart a bit under pressure.

A narrative and a brand.

Exactly, yeah. And this isn't the only attempt to glam up a sport that some people might find boring. Quite recently, Tiger Woods launched something called Tomorrow's Golf League, which is golf played entirely indoors with like simulators and these artificial putting greens. That can, like, change their shape dynamically and stuff. And I think that's quite a good comparison because Magnus Carlsen is to chess what Tiger Woods was to golf in his prime. He has all these modeling contracts, he has sponsorship deals with Puma, he's sort of broken out in a way that no chess star has for a long time. So I think quite a few people will just watch because his name is attached to it.

Tim, thanks very much for your time. Enjoy the match.

Thanks, Jason, I will.

That's all for this episode of The Intelligence. The show's editors are Chris Impey and Jat Gill. Our deputy editor is Jonjo Duff. I'm Avi Lerner-Kavlin, and our sound designer is Will Roe, with help this week from Timo Syla. Our senior producers are Rory Galloway and Sarah Larniuk, and our senior creative producer is William Warren. Our producers are Maggie Khadifa, Benji Guy, and Jonathan Day, and our assistant producer is Henrietta McFarlane, with extra production help this week from Emily Elias and Peter Granitz. We'll all see you back here tomorrow when Scam Inc. is in the Weekend Intelligence slot.