Australians are being urged to be extra diligent when it comes to investment opportunities that look too good to be true.
According to Scamwatch, Australians lost over $205 million to scams between 1 January and 1 May this year – a 166 per cent increase compared to the same period last year.
Investment scams on the rise
The majority of losses over this period have been to investment scams with $158 million lost – an increase of 314 per cent compared to the same period last year.
However the true losses to scams are likely to be much higher, as research suggests that only around 13 per cent of people report their losses.
While the reported losses have increased the number of reports has reduced slightly, indicating that on average people reported higher individual losses.
The majority of losses to investment scams involved crypto investments, with $113 million reported lost this year. Cryptocurrency is also the most common payment method for investment scams.
People aged 55 to 64 reported the highest total losses, $32 million between 1 January and 1 May and over 80 per cent of losses reported by this age group was lost to investment scams ($26m).
Scammers are becoming increasingly sophisticated in their techniques and strategies with one such strategy targeting victims again through “money recovery” scams.
What is a Money Recovery Scam?
These scams target people who have already lost money to a previous scam by promising to help victims recover their losses after paying a fee in advance. Australians have lost over $270,000 to these scams so far this year, an increase of 301 per cent.
“Scammers will ask for money and personal information before offering to ‘help’ the victim and will then disappear and stop all contact,” ACCC Deputy Chair Delia Rickard said.
“Money recovery scams are particularly nasty as they target scam victims again. These scams can lead to significant psychological distress as many of the people have already lost money or identity information.”
This year Scamwatch has received 66 reports of money recovery scams – a 725 per cent increase compared to the same period in 2021.
Scammers target previous scam victims, contacting them out of the blue, and pose as a trusted organisation such as a law firm, fraud taskforce or government agency. They may have official looking websites and use fake testimonials from other victims they have ‘helped’.
As well as an up-front payment they often ask victims to fill out fake paperwork or provide identity documents. Scammers may request remote access to computers or smart phones, enabling them to scam their unsuspecting victims.
Another tactic scammers use is to contact people by phone or email who haven’t actually been a victim of a scam and convince them that they’ve unknowingly been involved in one and are entitled to a settlement refund.
“If you get contacted out of the blue by someone offering to help recover scam losses for a fee, it is a scam. Hang up the phone, delete the email and ignore any further contacts,” Ms Rickard said.
“Don’t give financial details or copies of identity documents to anyone who you’ve never met in person and never give strangers remote access to your devices.”
“Scammers can be very convincing and one way to spot them is to search online for the name of the organisation who contacted you with words like ‘complaint’, ‘scam’ or ‘review’,” Ms Rickard said.
Warning signs of an investment scam
- Promise of low risks with high returns: Always remember, if something seems too good to be true it probably is. If you are promised ‘guaranteed returns’ this is a warning sign.
- You are contacted out of the blue: You receive a call, email or message on social media from someone offering unsolicited advice on investments.
- High-pressure tactics: You are contacted repeatedly and are told that you need to act quickly and invest or you will miss out.
- Remember you have less protections with cryptocurrency investments and scammers know this.
- Someone you haven’t met in person offers you investment advice: Never take investment advice from someone you meet on social media or a dating app.
- Use of celebrity endorsements or images: These are usually fake. Celebrities rarely discuss their investments or financial decisions in public.
- Someone has convincing promotional materials or websites: If documents like prospectuses aren’t registered with ASIC, it is likely part of a scam.
- You are asked to deposit funds into different accounts for each transaction: Scammers may claim this is for security reasons, or because they are an international company.
Do your research
Do not let anyone pressure you into making decisions about your money or investments and never commit to any investment on the spot.
Take time to research before investing. You can check who owns a website using search websites such as who.is. It’s also a good idea to check whether any account details you have been told to transfer to match the name of the company you are supposedly dealing with.
If you feel an offer to buy shares might be legitimate, always check the company’s listing on the stock exchange for its current value and recent shares performance. Some offers to buy your shares may be well below market value.
If you suspect you have been scammed
People who have lost money to a scam should contact their bank or financial institution as soon as possible. If they are not happy with the financial institutions response, victims can make a complaint to the Australian Financial Complaints Authority which is a free and independent dispute resolution service.
Financial institutions may be able to find where the money was sent, block the scam accounts and help others to avoid sending money to scammers.
For more advice on how to avoid scams and what to do if you or someone you know is a victim of a scam, visit the Scamwatch (www.scamwatch.gov.au) website.