Fraudulent investment scams reported to Scamwatch have cost Australians over $70 million in the first half of this year, reports the ACCC. Here’s what you can do to avoid falling victim.
That’s a massive 53.4 per cent increase in reports about investment scams received by Scamwatch this time last year. Projected losses are set to reach $140 million by the end of the year.
In addition to taking victims’ money, scammers often commit fraud or identity theft using the information they obtained from the victim. Here are the four investment scams most reported to Scamwatch, and some steps you can take to avoid them.
1. Cryptocurrency trading scams
“Investment scams are more prevalent than ever, and scammers are capitalising on interest in cryptocurrency in particular,” says ACCC Deputy Chair Delia Rickard. “More than half of the $70 million in losses were to cryptocurrency, especially through Bitcoin. Cryptocurrency scams were also the most commonly reported type of investment scam.”
Scammers pretend to have highly profitable trading systems based on individual expertise, or through algorithms they developed. Many of these scams also use fake celebrity endorsements to try and enhance their legitimacy.
Victims will initially be able to access small returns sourced from other victims’ initial deposits. However the scammers soon claim problems with making withdrawals and cut off contact.
Don’t be tempted by any crypto investment offer that offers high returns for low risk. “If something sounds too good to be true, it probably is,” warns Rickard.
2. Imposter bond scams
The ACCC reports that older Australians who are looking for well-known, respected companies to invest their money in have been the most impacted by imposter bond scams. These are investment scams where criminals impersonate legitimate companies and offer victims the opportunity to purchase fake corporate bonds.
“These scams are particularly hard to detect because scammers use the companies’ legitimate prospectuses which are registered with ASIC, link to the actual websites and have the correct ABN/ACN details,” says Rickard. “However, the scammers change key details such as contact information and bank details.”
It’s really important to contact the company directly. Visit their website by typing in the URL or doing an online search. Don’t click through on an email or social media message and seek independent financial advice no matter how confident you feel.
WATCH: How to choose a good financial adviser
3. Ponzi schemes
Ponzi schemes have been around for a long time, but their prevalence is only increasing. Last year conwoman Melissa Kaddick made headlines for running a Ponzi scheme that ripped off her family and friends for years.
These investment scams used advertising on social media sites and have their applications available via official app stores. People invest their money and are able to make small withdrawals to begin with, then the scammers cut off contact.
These scams disproportionately affected members of CALD (culturally and linguistically diverse) communities, including recent migrants from Burma and Sri Lanka.
4. Romance baiting
Investment scams originating through dating apps and websites are also becoming increasingly common. In these scams, the criminal develops a relationship with the victim and convinces them to invest – usually in cryptocurrency or bond scams. This close relationship means that this scam can be a particularly devastating way to lose your money.
“These scams predominantly impact younger people, who might be seeing these ‘investment opportunities’ through social media, recommendations from friends, or by registering their interest in cryptocurrency on questionable websites,” notes Rickard. “Remember, never take investment advice, send money or give credit card details, online account details or personal information to anyone you don’t know or trust, and never to someone you have only met online or over the phone, as you never know who you might be dealing with.”
What if you’ve already been scammed?
Contact your bank or financial institution immediately
They may be able to stop a transaction or close your account to protect you from further loss. Your credit card provider may be able to chargeback any fraudulent transactions.
Change your online passwords
I you think you followed a dodgy link, or your computer has been hacked or infected with malware, change all of your passwords. Never use one password for all your accounts. If someone uncovers it, they can unlock all your information.
Recover your stolen identity
If you suspect you are a victim of identity theft, you can also contact IDCARE via their website or phone 1300 IDCARE (432273). IDCARE is a free, government funded service that will support you through the process.
Report the scam to Scamwatch
You can also make a report to Scamwatch.
Contact a counselling or support service