The 3 most common types of investment scams
Don’t be fooled into thinking you can’t be fooled
Australians lost more than half a billion dollars to scammers in 2019, according to the latest figures in the Australian Competition and Consumer Commission’s (ACCC) Targeting Scams report released last week.
Total reported losses for 2019 reached $634 million. This is a worrying trend, because it is $141 million more than 2018 and $290 million more than in 2017. The total scam losses are near doubling year-on-year.
Investment scams were the most financially devastating at $126 million, which is approx 20% of all scams in Australia. In 2018, investment scams totaled $86 million and 2017 the total loss was $57 million. In the last three years, investment scams have risen more than 120%.
More recently, with the additional financial pressure of COVID-19 in our lives, we have seen and heard of many more and new ways of people trying to steal your money, finance details and identity.
This article will specifically look at the three (3) most common investment scams, specifically designed to have you or your business pay money on the promise of a financial opportunity.
The 3 most common types of investment scams
Investment cold calls
Where a scammer claiming to be a stockbroker or portfolio manager calls you and offers financial or investment advice.
The investments offered are usually shares, mortgages or real estate high return schemes, options trading or foreign currency trading. They will claim what hey are offering is low risk and will provide you with quick and high returns, or encourage you to invest in overseas companies.
The scammer may also claim that they are approved by a real government regulator or affiliated with a genuine company.
Shares promotions and hot tips
In these scams, the scammer contacts you via email or through a forum or online group, encouraging you to buy shares in a company they ‘predict’ is about to increase in value. The message will seem like an inside tip and will stress that you need to act quickly.
The scammer is trying to boost the price of stocks they have already bought so they can then sell shares to make a bigger profit. The share value will then go down dramatically, leaving you with shares that are literally worthless.
These scams offer early access to your super benefits, often through a self-manager super fund or for a fee. The offer may come from a scammer posing as a financial adviser. The scammer may ask you to agree to telling a false story to your superannuation fund to ensure the early release of your money.
Then, acting as your financial adviser, they will deceive your superannuation fun into paying out your super benefits directly to them. Once they have your money, the scammer may take large ‘fees’ out of the released fund or leave you with nothing at all.
How to protect yourself
It’s easy to think that only foolish people fall for these types of scams, but it isn’t the case. Many otherwise astute and Australians have fallen victims to these types of scams. But there are steps you can take to ensure you don’t become a scamming statistic.
The ACCC advises to take these precautions
- Do not give your details to an unsolicited caller.
- Do not reply to emails that are offering financial advice or investment opportunities.
- Be suspicious of investment opportunities that promise a high return with little or no risk.
- Check if the ‘financial advisor’ who contacted you is registered on the ASIC website.
- Any business or person that offers or advises you about financial investment products must be an Australian Financial Services License (AFSL) holder or authorised under one.
- Do not let anyone pressure you into making decisions about your money or investments.
The ACCC encourages people to visit www.scamwatch.gov.au to report scams and learn more about what to do if they are targeted by scammers.
Read related articles to scams:
- Australians Over 55 lose $260 million from scams in 2019
- Protect yourself against phone scams from fake ‘Telstra technicians’
- Scammers exploiting Coronavirus to target online users
- 8 tips to avoid falling victim to cybercrime
- Tricks to help you identify potential email scam attacks
- Investment, dating, crypto scams rip off millions
- How to check suspicious email links on your mobile or tablet
- Australia’s 3 biggest cyber threats that target over 60s
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