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Financial scams are on the rise with thousands of people falling victimevery year. This article discusses the many different types of scams to beaware of and what to do if you think you have become a victim.

In 2021 Australians reported over 9,000investment scams to Scamwatch, well up on the 7,000 reported in 2020. Scamwatchrecorded investment scam losses of over $177 million, but add in notificationsmade to other government agencies and the major banks and reported lossesacross 2021 soared to $701 million. Due to embarrassment many losses gounreported so we may never know the full extent of the damage.

With a high likelihood that we willall be targeted by scammers at some stage, perhaps repeatedly, how can weidentify scams and protect ourselves from losses?

Ignore unsolicited offers

Most investment scams start with aphone call. No matter how compelling the story told by the caller, if youhaven’t done anything to invite contact from an investment’s promoter, it islikely to be a scam. The simple solution? Hang up early in the call. If theapproach is made by e-mail, social media or text message don’t click on anylinks and delete the message.

Bewareof promises of large and guaranteed returns

In times of low interest rates it’shard to find a good return on lower risk investments such as term deposits andbonds. The promise of high returns, perhaps with a built in guarantee may lookcompelling. But the age old saying holds: if it seems too good to be true, itprobably is.

Some investors are willing to putsuch promises to the test by making a small investment. When professionallooking statements show that the promised performance is being delivered, theinvestor makes a much larger deposit. Not long after that the promoterseemingly disappears.

Research the promoter through independent and official channels

Are they based overseas? This is abig red flag. If Australian, are they (and their prospectus) registered withASIC? Do they have an Australian Financial Services Licence? Do they appear onthe list of companies you should not deal with (available atmoneysmart.gov.au)? Is their street address genuine and do they have a physicaloffice? How long have they been in business?

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.

Educate yourself

Scams are evolving all the time.Government websites moneysmart.gov.au and scamwatch.gov.au provide informationon a wide range of scams and are updated as new scams appear. They also provideadvice on how you can protect yourself.

What can you do if you’re the victim of a scam?

You can make a report via theScamwatch website (operated by ACCC), to ASIC and to your local police. Stopsending money to the scammer, and beware of the double sting where scammersoffer to help you recover your losses, for a fee, of course.

While ASIC and ACCC do not providedirect assistance to scam victims, the information can help with investigationand law enforcement, and provide intelligence on scam activity. Police may alsobe limited in their ability to identify and prosecute scammers, particularly ifthey are located overseas. The sad fact is that most victims of scams never seetheir money again.

Practical help is available fromIDCARE. This is a free support service that can assist businesses andindividuals with a range of cyber issues including identity theft, romancescams and investment scams.  

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