In 2021 Australians reported over 9,600 investment scams to Scamwatch, well up on the 7,296 reported in 2020.
While there are a number of different scam types including phishing, hacking and identity theft; investment scams are by far the one people lose the most amount of money to.
Scamwatch recorded investment scam losses of $65.8 million, but add in notifications made to other government agencies and the major banks and reported losses across 2021 soared to $323 million. Due to embarrassment many losses go unreported so we may never know the full extent of the damage.
With a high likelihood that we will all be targeted by scammers at some stage, perhaps repeatedly, how can we identify scams and protect ourselves from losses?
Ignore unsolicited offers
Most scams start with a phone call. No matter how compelling the story told by the caller, if you haven't done anything to invite contact from an investment's promoter, it is likely to be a scam. The simple solution? Hang up early in the call. If the approach is made by e-mail, social media or text message don't click on any links and delete the message.
Beware of promises of large and guaranteed returns
In times of low interest rates it's hard to find a good return on lower risk investments so the promise of high returns, perhaps with a built in guarantee, may look compelling. But the age old saying holds - if it seems too good to be true, it probably is.
Some may be willing to put such promises to the test by making a small investment. When professional looking statements show that the promised performance is being delivered, it could then be tempting to make a much larger deposit. In many cases, after a larger sum of money has been invested, the promoter seemingly disappears.
Research the promoter through independent and official channels
There are three main types of investment scams:
- The investment offer is downright fake.
- The investment exists, but the money you transfer does not go towards the investment.
- The scammer pretends to be an employee of a legitimate company
In all three cases, the money you planned to invest goes directly to the scammer and not towards any real investment.
Before investing, ensure you do your due diligence as your future could be dependent on it.
Are they based overseas? This is a big red flag. If Australian, are they registered with the Australian Securities and Investments Commission (ASIC)? Do they have an Australian Financial Services Licence? Do they appear on the list of companies you should not deal with (available at moneysmart.gov.au)? Is their street address genuine and do they have a physical office? How long have they been in business?
While this may all seem a bit pedantic, scammers are smart and know how to create a legitimate looking business that feels real to you in the moment. A well-presented website, daily investment reports and a local phone number is not enough information for you to make a sound decision on who your hard earned money will be going to.
Get independent advice before investing
Even with a legitimate investment an independent assessment is a good idea. With a questionable investment it might just save you from being scammed.
What can you do if you're the victim of a scam?
You can make a report via the Scamwatch website, operated by the Australian Competition and Consumer Commission (ACCC), to ASIC and to your local police. Stop sending money to the scammer, and beware of the double sting where scammers offer to help you recover your losses, for a fee, of course.
While ASIC and ACCC do not provide direct assistance to scam victims, the information can help with investigation and law enforcement, and provide intelligence on scam activity. Police may also be limited in their ability to identify and prosecute scammers, particularly if they are located overseas. The sad fact is that most victims of scams never see their money again.
Practical help is available from IDCARE. This is a free support service that can assist businesses and individuals with a range of cyber issues including identity theft, romance scams and investment scams.
This information provides general advice only. We do not provide advice about this product based on any consideration of your personal objectives, needs or circumstances. Some content reproduced with permission.
Published: Wednesday, 11 May 2022