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Investment Scams in Australia

Investment scams are becoming increasingly prevalent and devastating in Australia, costing $1.3 billion last year alone. Though they may not occur as frequently as other types of scams, the financial losses are often substantial. Scammers are becoming more sophisticated, exploiting new technologies and financial trends to lure victims. Crucially, there are steps you can take to protect yourself and your hard-earned wealth from these bad actors – let’s look at some of the most common investment scams around right now, how to spot them, and what to do if you’ve been scammed.

Current Investment Scams

Several types of investment scams are circulating in Australia. Here are five of the most common and concerning scams:

1. Fake Cryptocurrency Offers

Scammers exploit the complexity and anonymity of cryptocurrency, making it difficult to recover funds once they’ve been lost. They often promise insider tips or guaranteed returns through fraudulent platforms. Always be wary of unsolicited crypto advice, and verify the legitimacy of platforms before investing.

2. Ponzi & Pyramid Schemes

These schemes attract new investors with promises of high returns, using the money from new recruits to pay earlier investors. Eventually, the scheme collapses when new money stops coming in, leaving most participants with nothing.

3. Unlicensed Investment Advisers

Scammers pose as legitimate advisers offering unsolicited investment opportunities, using fake documents and websites to convince their victims. Always ensure that anyone offering financial advice holds an Australian Financial Services Licence (AFSL).

4. “Get Rich Quick” Investment Schemes

These scams are often advertised through social media or online webinars, promising quick and substantial returns. Scammers may present “exclusive” opportunities that sound too good to be true, and they usually are.

5. Fake Initial Public Offerings (IPOs)

Scammers may present fake opportunities to invest in companies supposedly about to go public. In many cases, these companies don’t even exist, or the scammer impersonates a real company. Always research and verify IPO offers independently.

How to Spot Investment Scams

Scammers are skilled at making their offers appear legitimate, but there are common warning signs that can help you spot a scam before it’s too late:

Unsolicited Offers and Urgency

If you’re pressured to act quickly, or if someone contacts you with an out-of-the-blue offer, be cautious. Scammers thrive on creating a sense of urgency, forcing victims to make rushed decisions.

Guaranteed Returns

No legitimate investment can offer guaranteed returns, especially high ones with little to no risk. Be wary of any promises that sound too good to be true.

Unusual Payment Methods

If someone asks you to pay using gift cards, cryptocurrency, or other unconventional methods, it’s likely a scam. Legitimate businesses use standard banking methods.

Unverified Credentials

Always cross-check the credentials of anyone offering financial advice or investment opportunities. You can verify their AFSL status on the ASIC website.

What to Do if You’ve Been Scammed

If you’ve fallen victim to a scam, it’s important to act quickly to protect yourself and minimise further losses. Here are steps you should take:

Contact Your Bank Immediately

Inform your bank or card provider that you’ve been scammed. They can assist in halting any ongoing transactions or prevent further financial loss.

Reach Out to IDCARE

IDCARE is a free support service that helps Australians protect their personal and financial information after a scam. They can guide you through steps to minimise further damage.

Report the Scam

Warn others by reporting the scam to authorities such as the Australian Competition and Consumer Commission (ACCC). Additionally, consider making a report to your local police.

Be Vigilant for Follow-Up Scams

Unfortunately, many victims are targeted multiple times. After reporting a scam, stay alert for further fraudulent contact, particularly from people claiming to help recover your lost money.

Seek Emotional and Financial Support

Being scammed can be a traumatic experience. Reach out to financial counsellors or support networks like Lifeline or Beyond Blue if the scam is affecting your mental health or finances.

Looking Ahead

Investment scams are on the rise in Australia, and scammers are becoming increasingly sophisticated in their methods. By staying informed and vigilant, Australians can protect themselves from these deceptive schemes. Remember to always verify the legitimacy of investment opportunities, take your time making decisions, and seek help immediately if you suspect you’ve been scammed. With the right knowledge and resources, you can safeguard your financial wellbeing from the threat of investment scams.

Scams and fraudulent investments often come across our radar, and we’ve posted about such topics before on our blog (here and here). Keep an eye out for more!

Adapted from Macquarie Bank’s “Stay Ahead of Investment Scams”