The hackers work on dating and social sites, often where people are more vulnerable. They create fake accounts and pretend to be attractive women to get talking to male users.
The details have emerged following a report by security company Trend Micro, dubbed "Sextortion in the Far East." Trend Micro says that fraudsters first talk to people on dating sites, but then ask their victims to move the conversation over to Skype, or other external communication platforms.
The hackers then feign issues with sound or the video and tell their victims to download a custom app to their smartphones, which they assure them will help.
Hackers encourage their victims to carry out explicit sex acts, which they record. It is then that the attacker ends their facade as an attractive woman and moves on to blackmail, saying they'll share the video or images publicly, and to friends, family, and work colleagues if the victim does not hand over money.
The report explains that the custom app, on Android, also puts malware into the device it is installed, which can uncover more personal details about their victim.
Here's a diagram in the process from Trend Micro's analysis:
Hackers also use numerous bank accounts to evade suspicion from banks while targeting online daters, Global Dating Insights adds.
Cybercriminals have been using dating sites to find victims for a while now - and it's big business. Sextortion is a problem around the world - earlier this year UK police warned the public about the increasing problem of gangs using social network sites, particularly dating platforms, to work on.
In May 2014, global policing unit INTERPOL caught a huge sextortion ring of more than 58 people who operated in the Philippines. The cybercriminals managed to extort thousands of pounds from their targets, Al Jazeera America writes.
The gang blackmailed hundreds of people across the world after they'd exposed themselves on webcams. One victim was a Scottish teenager, who committed suicide.