Money lost to scams climbs $32 million for those aged 55 to 64 ⚠️💰
ACCC’s report highlights that most of the scammed victims who reported the incident to Scamwatch in 2022 were aged 55 to 64, losing $32 million, 78% of which was to investment scams.
Scams have skyrocketed over a 5-month period, stealing more than $200 million from unsuspecting Australians.
The Australian Competition and Consumer Commission (ACCC) has issued a public warning about the risk of scams which stole $205,000,000 from Aussies between 1 January and 1 May of this year, an increase of 166% compared to the same period last year.
It is believed only about 13% of scammed individuals report the incident to ACCC’s Scamwatch service, so real losses are estimated to be multiple times that figure.
Rise of investment scams
About 77% of the total losses, or $158 million, concern investment scams, which have recorded an increase of 314% compared to the previous year’s corresponding period.
The beginning of 2021 was characterised by a decline in overall investments due to COVID-19, but it appears that the fraudulent activity has rebounded.
“We are seeing more money lost to investment scams and so are urging all Australians not to trust investment opportunities that seem too good to be true,” stated ACCC’s Deputy Chair, Delia Rickard.
Fear of missing out on the cryptocurrency investment craze that took over the world at the start of the year pushed more people into online investment scams. Some $113 million was reported lost to phony crypto-investments.
Because these digital assets are hard to trace in the blockchain or require much effort and carry a high cost, many scammers request the bogus investments to be made in cryptocurrency to minimise the chances of victims going after them.
“Australians should be very wary of anyone asking them to invest in or transfer money using cryptocurrency, especially if it’s someone you have only met online. Many consumers are unfamiliar with the complexities of cryptocurrency, and this can make them more vulnerable to scams,” said Rickard.
In many cases, the scammers use cryptocurrency exchange services on the dark web to “spin” the stolen assets and bounce amounts in pools of random transactions that help obscure their trace.
Common types of investment scams
Cryptocurrency investment scammers are convincing. They may advertise or post on social media offering great returns from cryptocurrency trading. If you click on the advertisement or post, the scammer will contact you or you will be directed to a fake website. The scammer will offer to make an investment on your behalf, or provide details of an app or website through which you can invest.
Unsolicited contacts about investing
A scammer claiming to be a stock broker or portfolio manager calls, emails or contacts you on social media and offers financial or investments advice. They may even claim to be from an investment firm or company you have heard of, as scammers sometimes impersonate these businesses to seem legitimate. The scammer will claim what they are offering is low-risk and will provide you with quick and high returns, or encourage you to invest in overseas companies.
The scammer sets up a fake dating profile and will connect with you on a dating website, dating app or social media. The scammer will ask to continue chatting to you off the dating website or app, typically on a free but encrypted chat site such as WhatsApp, Google Hangouts or WeChat. They may say they want to do this as these chat sites are ‘more private’.
Celebrity Endorsement Scams
Scammers use the image, name and personal characteristics of well-known celebrities without their permission, to entice you into investing. Fake celebrity endorsements are often used to advertise scam cryptocurrency schemes. The investment adverts or news stories make claims about investment opportunities with huge returns and will typically link to a scam website, often involving a cryptocurrency investment ‘opportunity’. In March 2022, the ACCC sued Facebook for allowing fake celebrity-endorsed malvertising campaigns on the social media platform for misleading users into fake investments. In one case alone, $650,000 was lost to these scam ads.
Ponzi schemes are scams that use funds collected from new investors to pay existing investors. No real investment exists and eventually these schemes collapse. Scammers contact people on social media and asking them to download or invest through apps. They promise you will see high returns very quickly and you will think you do, but the scammer uses money other people have invested to pay you some return.
Share promotions and hot tips
The scammer encourages you to buy shares in a company they predict is about to increase in value. You may be contacted by email, via social media or the message will be posted in a forum. The message looks like an inside tip and will usually stress that you need to act quickly. The scammer is trying to boost the price of stock so they can sell shares they have already bought, and make a huge profit. The share value will then go down dramatically.
Investment seminars may be promoted by promising motivational speakers, investment experts, or self-made millionaires who will give you expert advice on investing, with the purpose of convincing you into following high risk investment strategies. The promoters may charge you an attendance fee, sell overpriced reports or books, and sell investments and property without letting you get independent advice.
uperannuation scams offer to give you early access to your super fund, often through a self-managed 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 a story to ensure the early release of your money and then, acting as your financial adviser, they will deceive your superannuation company 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.
The SMS trend
The ACCC highlights that most scamming lures today are delivered via SMS, accounting for 54% of the total between January and May 2022. Previously, the most common means of contact were phone calls.
The official advice given to those receiving suspicious messages that promise investment opportunities is to delete the message immediately and report it to Scamwatch.
One reason for the change in communication tactics is the passing of C661:2020 Reducing Scam Calls by the Communications Alliance, which forced telecom service providers to take more aggressive measures to detect and stop scam calls.
Since the introduction of the code, Australia’s largest telcos have blocked roughly 549 million scam calls, so criminals were forced to explore alternative communication channels like SMS.
However, the SMS space won’t remain unregulated for much longer. New rules are to be introduced this year to tackle this threat too. When that happens, the next stage for the fraudsters will be to use email, but that’s far from ideal.
The ACCC’s report highlights that most of the scammed people who reported the incident to Scamwatch in 2022 were aged 55 to 64, losing $32 million, 78% of which was to investment scams.
Many of people aged over 50 don’t fully understand how the blockchain works, what risks are involved in cryptocurrency investments, and how they can verify the validity of presented token-based offers.
Unsolicited investment offers combined with promises of guaranteed high and/or quick returns are typically signs of a scam.
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.
Read more on the common types of scams on the Scamwatch website
To ensure you are up to speed on how best to identify email or SMS scams, read our articles below:
- How to check suspicious email links on your mobile or tablet
- Tricks to help you identify potential email scam attacks
- 8 tips to avoid falling victim to cybercrime
- Australia’s 3 biggest cyber threats that target over 60s
- The 3 most common types of investment scams
- Aussies over 65 become the largest group of victims being scammed
Sections of this article were first published by Bill Toulas of ACS Information Age.
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