Personal Finance

'I know you cheated on your wife.' Growing blackmail scam demands payment in bitcoin

Key Points
  • A new scam is targeting men around the country, many in affluent neighborhoods.
  • The perpetrator sends letters claiming to know of the recipient's infidelity, and demanding hush money in bitcoin.
  • If you do receive the letter, don't pay the ransom. But do alert police and the FBI.
Growing blackmail scam demands payment in bitcoin

"I know you cheated on your wife."

Those chilling words were in a letter sent to Dave Eargle's home. The then-graduate student found the note in his mailbox and could not believe what he was reading.

"It is just your bad luck that I stumbled across your misadventures while working a job," the letter continued.

"Even if you decide to come clean with your wife about your cheating, doing so won't protect her from the humiliation she will feel when her friends and family find out the sordid details from me."

And then finally, a demand: "If you want me to destroy the evidence and leave you alone forever then send $2,000 in BITCOIN."

Eargle is happily (and faithfully) married, but said the blackmail letter had him on edge.

"And I had to think for a second because I was in a bit of a fluster, 'Am I actually keeping a secret from my wife?'" said Eargle, now an assistant professor at University of Colorado's Leeds School of Business. "It was scary because I felt like I was being targeted."

This is the envelop Dave Eargle received the letter in.
Source: Dave Eargle

He notified police and then decided to post the experience on his relatively unknown blog. He soon realized he was not alone.

"[My blog] had received maybe three, two hits a day," he said. "Suddenly, it jumped up to 200 a day during right after the waves [of letters], 200 a day, 300 a day.

"One of the waves, I got 500 visits. … I got a flood of new people saying, 'I got very similar letter. What do I do?'"

Eargle figured out that the letters were sent out in waves from different location across the country. The message was always the same — pay up or I will reveal your secret.

Married men from all over began reaching out to Eargle, some panicking about the letter.

"It was really comforting to find out that I wasn't probably being necessarily targeted, that this was just part of some more broad blackmailing scheme," he said.

[The attacker] is hoping that they might get lucky with someone who actually … [has] some infidelity there. And if they hit that target, that's a person who's probably willing to pay.
Patrick Wyman

According to Eargle, the scammer behind the letters is still at it. A bunch of letters went out across the country this month, with others going out in November and December.

"The cost of an incorrect guess about someone being unfaithful is … the cost of a stamp these days, 50 cents," Eargle said. "That's not bad odds for an attacker."

When Eargle received the letter, the ransom was $2,000 in bitcoin, but he says more recent versions of the letter can ask for as much as $8,000 in bitcoin.

"The amount of money is such that it's not so much that someone might be willing to just pay that to make it go away," said Patrick Wyman, a supervisory special agent with the FBI's money laundering unit. "They're hoping that they might get lucky with someone who actually … [has] some infidelity there. And if they hit that target, that's a person who's probably willing to pay."

The FBI and other authorities are working on bringing whomever is behind the scheme to justice.

No one is certain how the scammer picks the targets, but Eargle said would-be victims seem to live in affluent neighborhoods.

The men who received the letter may be "concerned about losing their social status if this attacker sends out information to their friends in their neighborhoods," Eargle said.

To make it easier to pay the ransom, the letter includes instructions on how to buy bitcoin. Eargle said each letter has a unique bitcoin wallet to send the money to, making it harder to trace.

"The idea behind virtual currency is that it hides behind this veil of secrecy that just because it's letters and numbers in terms of an account number, and there's no personal information associated with it, that law enforcement won't be able to track it," said Wyman at the FBI. "Virtual currencies do make it more difficult to track, but not impossible."

If you do receive the letter, the best advice is: Don't pay the ransom. (Eargle and others have not paid, and the scammer has not made good on those threats to alert letter recipients' wives or anyone in their social circles.)

But you should alert police and the FBI.

"That information is going to be very, very important for us to help connect the dots," Wyman said.

To avoid be targeting by the letter, Wyman suggests being careful whom you give your personal information to.

"If you're cautious about where you're sharing your personal information, … very specific details about yourself or your family, … that is going to help protect you from maybe this sort of a scam," he said.

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